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TEVA Q3 Earnings In Line, Sales Beat, Revenue View Raised
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Teva Pharmaceutical Industries Limited (TEVA - Free Report) reported third-quarter 2023 adjusted earnings of 60 cents per share, which matched the Zacks Consensus Estimate. Earnings rose 1.7% year over year.
Revenues for the third quarter came in at $3.85 billion, which beat the Zacks Consensus Estimate of $3.70 billion. Total revenues rose 7% on a reported as well as a constant currency basis. Sales growth was driven by higher revenues from Austedo in the North America segment, generic products and Ajovy globally, partially offset by lower sales of some legacy brands in the North America segment and lower sales in the Other segment.
Segment Discussion
The company reports through the following segments based on three regions — North America (comprising the United States and Canada), Europe and International markets.
North America segment sales were $2.0 billion, up 11% year over year, as lower sales of branded drugs, Copaxone and Bendeka/Treanda were offset by an increase in sales of generic products and newer branded drugs, Austedo and Ajovy. In the United States, sales increased 7% from the prior-year quarter to $1.9 billion.
Generic/biosimilar product revenues rose 15% from the year-ago period to $929 million in the North American segment due to contribution from the generic version of Bristol-Myers’ Revlimid, which was partially offset by increased competition faced by other generic medicines. Generic revenues beat our model estimate of $896.3 million as well as the Zacks Consensus Estimate of $839.0 million.
Huntington's disease drug, Austedo recorded sales of $339 million in North America, up 30% year over year. Sales were driven by volume growth, as prescription trends continued to grow, and the launch of Austedo extended-release tablets, its once-a-day formulation, in May. Austedo sales beat our model estimate of $310.7 million as well as the Zacks Consensus Estimate of $317.0 million.
Ajovy recorded sales of $61 million for the quarter, up 8% year over year, driven by higher volumes. Ajovy sales beat our model estimate of $58.5 million but missed the Zacks Consensus Estimate of $63.0 million.
In April, the FDA approved Teva’s Uzedy (risperidone) extended-release injectable suspension, a long-acting subcutaneous atypical antipsychotic injection, for the treatment of schizophrenia in adults. Uzedy was launched in May 2023. Teva did not separately report any Uzedy sales in the third quarter but said that Uzedy has captured over 55% of all new prescriptions in the risperidone long-acting market.
Copaxone posted sales of $103 million in North America, down 2% year over year due to generic erosion in the United States and lower market share owing to increased competition. Copaxone sales beat our model estimate of $61.3 million as well as the Zacks Consensus Estimate of $67.0 million.
Combined sales of Bendeka and Treanda declined 26% from the year-ago quarter to $57 million. Sales of Bendeka and Treanda were hurt by generic erosion. Teva lost orphan drug exclusivity for bendamustine products in December 2022.
Distribution revenues, generated by Anda, declined 1% year over year in the quarter to $367 due to lower demand.
The Europe segment recorded revenues of $1.15 billion, up 7% year over year on a reported basis. Sales were flat on a constant currency basis. Europe revenues beat our model estimate of $1.12 billion as well as the Zacks Consensus Estimate of $1.14 billion.
Generic products revenues in Europe rose 2% in constant currency terms to $886 million, mainly due to higher volumes of generic drugs and price hikes of OTC medicines. Copaxone sales declined 19% to $55 million. Ajovy revenues increased 28% on a constant currency basis to $41 million.
In the International Markets segment, sales rose 2% year over year to $485 million. In constant currency terms, sales increased 20% from a year ago, driven mainly by higher generic revenues.
Generic product revenues rose 17% in constant-currency terms to $381 million, mainly driven by price increases, which led to higher revenues in most markets, partially offset by regulatory price reductions and generic competition in Japan. Copaxone sales were $10 million compared with $9 million in the year-ago quarter.
The Other segment (comprising the sale of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $217 million, down 10% year over year on a reported basis and 12% on a constant currency term.
Margin Discussion
Adjusted gross margin was 53.5% for the quarter, up 50 basis points year over year due to a favorable product mix (higher revenue from Austedo) in the North America segment, partially offset by higher cost of goods sold due to inflationary pressure.
Adjusted operating margin declined 70 bps to 26.5% in the quarter due to higher R&D costs, partially offset by higher gross profit margins.
Ups 2023 Sales Outlook
Teva slightly raised its revenue guidance for 2023 for the second time this year while keeping the EPS range intact.
Teva expects to record revenues in the range of $15.1-$15.5 billion compared with $15.0-$15.4 billion expected previously.
Sales of Copaxone in all regions are expected to be approximately 550 million (previously $500 million). Teva expects Ajovy and Austedo revenues of approximately $400 million and $1.2 billion, respectively.
Adjusted operating income is expected in the range of $4-$4.4 billion (maintained). Teva expects adjusted EBITDA in the range of $4.5-$4.9 billion (maintained). Teva expects a sequential improvement in margins in the fourth quarter.
Teva expects adjusted EPS in the range of $2.25-$2.55 in 2023 (maintained). Adjusted tax rate is expected to be in the range of 12%-15% versus the prior expectation of 14%-17%.
Our Take
Teva’s third-quarter results were modest as it met estimates for earnings while missing the same for sales. The strong performance of Austedo, Ajovy and Teva’s global generics business was encouraging. The increase in revenue guidance reflects Teva’s sustainable growth from key products. Teva said the Gaza-Hamas war has not affected its production activity in Israel. Teva’s global headquarters and some manufacturing and R&D facilities are located in Israel.
Teva’s shares were up almost 1.2% on Wednesday in response to the better-than-expected results. So far this year, shares of Teva Pharmaceuticals have risen 0.3% compared with the industry’s increase of 18.9%.
Image Source: Zacks Investment Research
Teva expects its newer drugs, Austedo, Uzedy and Ajovy, as well as a stable generics business to help revive top-line growth in future quarters. Teva’s revenues have suffered significantly since it lost exclusivity of its key multiple sclerosis medicine, Copaxone, in 2015. It is saving costs and improving margins through the optimization of operations for efficiency while also lowering the debt on its balance sheet.
Teva plans to separate its API unit as a stand-alone business unit. Earlier this week, Teva announced the appointment of Dr. R. Ananthanarayanan (Ananth) as CEO of Teva API.
Teva regularly enters into business development activities to strengthen its pipeline. Last month, Teva entered into a deal with Sanofi (SNY - Free Report) , a global leader in immunology, to jointly develop and commercialize its inflammatory bowel disease (“IBD”) candidate, TEV’574, a novel anti-TL1A therapy. TEV’574 is presently being evaluated in a phase IIb study for ulcerative colitis and Crohn's disease, which are two types of IBD. Initial data from the studies are expected in 2024. Teva and Sanofi will equally share the development costs globally. Teva’s 2023 guidance range does not include the first upfront milestone payment ($500 million) payable from Sanofi under this deal.
Zacks Rank & Stocks to Consider
Teva currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks generic drugmakers/biotech companies are Bausch Health Companies (BHC - Free Report) and Acasti Pharma (ACST - Free Report) . While Bausch Health Companies sports a Zacks Rank #1 (Strong Buy), Acasti Pharma has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings per share estimates for Bausch Health Companies have increased from $3.28 to $3.35 for 2023 and from $3.70 to $3.78 for 2024 in the past 30 days. Shares of BHC have surged 14.2% year to date.
Loss per share estimates for Acasti Pharma have narrowed from $1.97 to $1.44 for 2023 and from $1.70 to $1.29 for 2024 in the past 30 days. Shares of ACST have declined 18.5% year to date. Earnings of Acasti Pharma beat estimates in the past three quarters, the average surprise being 46.11%.
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TEVA Q3 Earnings In Line, Sales Beat, Revenue View Raised
Teva Pharmaceutical Industries Limited (TEVA - Free Report) reported third-quarter 2023 adjusted earnings of 60 cents per share, which matched the Zacks Consensus Estimate. Earnings rose 1.7% year over year.
Revenues for the third quarter came in at $3.85 billion, which beat the Zacks Consensus Estimate of $3.70 billion. Total revenues rose 7% on a reported as well as a constant currency basis. Sales growth was driven by higher revenues from Austedo in the North America segment, generic products and Ajovy globally, partially offset by lower sales of some legacy brands in the North America segment and lower sales in the Other segment.
Segment Discussion
The company reports through the following segments based on three regions — North America (comprising the United States and Canada), Europe and International markets.
North America segment sales were $2.0 billion, up 11% year over year, as lower sales of branded drugs, Copaxone and Bendeka/Treanda were offset by an increase in sales of generic products and newer branded drugs, Austedo and Ajovy. In the United States, sales increased 7% from the prior-year quarter to $1.9 billion.
Generic/biosimilar product revenues rose 15% from the year-ago period to $929 million in the North American segment due to contribution from the generic version of Bristol-Myers’ Revlimid, which was partially offset by increased competition faced by other generic medicines. Generic revenues beat our model estimate of $896.3 million as well as the Zacks Consensus Estimate of $839.0 million.
Huntington's disease drug, Austedo recorded sales of $339 million in North America, up 30% year over year. Sales were driven by volume growth, as prescription trends continued to grow, and the launch of Austedo extended-release tablets, its once-a-day formulation, in May. Austedo sales beat our model estimate of $310.7 million as well as the Zacks Consensus Estimate of $317.0 million.
Ajovy recorded sales of $61 million for the quarter, up 8% year over year, driven by higher volumes. Ajovy sales beat our model estimate of $58.5 million but missed the Zacks Consensus Estimate of $63.0 million.
In April, the FDA approved Teva’s Uzedy (risperidone) extended-release injectable suspension, a long-acting subcutaneous atypical antipsychotic injection, for the treatment of schizophrenia in adults. Uzedy was launched in May 2023. Teva did not separately report any Uzedy sales in the third quarter but said that Uzedy has captured over 55% of all new prescriptions in the risperidone long-acting market.
Copaxone posted sales of $103 million in North America, down 2% year over year due to generic erosion in the United States and lower market share owing to increased competition. Copaxone sales beat our model estimate of $61.3 million as well as the Zacks Consensus Estimate of $67.0 million.
Combined sales of Bendeka and Treanda declined 26% from the year-ago quarter to $57 million. Sales of Bendeka and Treanda were hurt by generic erosion. Teva lost orphan drug exclusivity for bendamustine products in December 2022.
Distribution revenues, generated by Anda, declined 1% year over year in the quarter to $367 due to lower demand.
The Europe segment recorded revenues of $1.15 billion, up 7% year over year on a reported basis. Sales were flat on a constant currency basis. Europe revenues beat our model estimate of $1.12 billion as well as the Zacks Consensus Estimate of $1.14 billion.
Generic products revenues in Europe rose 2% in constant currency terms to $886 million, mainly due to higher volumes of generic drugs and price hikes of OTC medicines. Copaxone sales declined 19% to $55 million. Ajovy revenues increased 28% on a constant currency basis to $41 million.
In the International Markets segment, sales rose 2% year over year to $485 million. In constant currency terms, sales increased 20% from a year ago, driven mainly by higher generic revenues.
Generic product revenues rose 17% in constant-currency terms to $381 million, mainly driven by price increases, which led to higher revenues in most markets, partially offset by regulatory price reductions and generic competition in Japan. Copaxone sales were $10 million compared with $9 million in the year-ago quarter.
The Other segment (comprising the sale of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $217 million, down 10% year over year on a reported basis and 12% on a constant currency term.
Margin Discussion
Adjusted gross margin was 53.5% for the quarter, up 50 basis points year over year due to a favorable product mix (higher revenue from Austedo) in the North America segment, partially offset by higher cost of goods sold due to inflationary pressure.
Adjusted operating margin declined 70 bps to 26.5% in the quarter due to higher R&D costs, partially offset by higher gross profit margins.
Ups 2023 Sales Outlook
Teva slightly raised its revenue guidance for 2023 for the second time this year while keeping the EPS range intact.
Teva expects to record revenues in the range of $15.1-$15.5 billion compared with $15.0-$15.4 billion expected previously.
Sales of Copaxone in all regions are expected to be approximately 550 million (previously $500 million). Teva expects Ajovy and Austedo revenues of approximately $400 million and $1.2 billion, respectively.
Adjusted operating income is expected in the range of $4-$4.4 billion (maintained). Teva expects adjusted EBITDA in the range of $4.5-$4.9 billion (maintained). Teva expects a sequential improvement in margins in the fourth quarter.
Teva expects adjusted EPS in the range of $2.25-$2.55 in 2023 (maintained). Adjusted tax rate is expected to be in the range of 12%-15% versus the prior expectation of 14%-17%.
Our Take
Teva’s third-quarter results were modest as it met estimates for earnings while missing the same for sales. The strong performance of Austedo, Ajovy and Teva’s global generics business was encouraging. The increase in revenue guidance reflects Teva’s sustainable growth from key products. Teva said the Gaza-Hamas war has not affected its production activity in Israel. Teva’s global headquarters and some manufacturing and R&D facilities are located in Israel.
Teva’s shares were up almost 1.2% on Wednesday in response to the better-than-expected results. So far this year, shares of Teva Pharmaceuticals have risen 0.3% compared with the industry’s increase of 18.9%.
Image Source: Zacks Investment Research
Teva expects its newer drugs, Austedo, Uzedy and Ajovy, as well as a stable generics business to help revive top-line growth in future quarters. Teva’s revenues have suffered significantly since it lost exclusivity of its key multiple sclerosis medicine, Copaxone, in 2015. It is saving costs and improving margins through the optimization of operations for efficiency while also lowering the debt on its balance sheet.
Teva plans to separate its API unit as a stand-alone business unit. Earlier this week, Teva announced the appointment of Dr. R. Ananthanarayanan (Ananth) as CEO of Teva API.
Teva regularly enters into business development activities to strengthen its pipeline. Last month, Teva entered into a deal with Sanofi (SNY - Free Report) , a global leader in immunology, to jointly develop and commercialize its inflammatory bowel disease (“IBD”) candidate, TEV’574, a novel anti-TL1A therapy. TEV’574 is presently being evaluated in a phase IIb study for ulcerative colitis and Crohn's disease, which are two types of IBD. Initial data from the studies are expected in 2024. Teva and Sanofi will equally share the development costs globally. Teva’s 2023 guidance range does not include the first upfront milestone payment ($500 million) payable from Sanofi under this deal.
Zacks Rank & Stocks to Consider
Teva currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks generic drugmakers/biotech companies are Bausch Health Companies (BHC - Free Report) and Acasti Pharma (ACST - Free Report) . While Bausch Health Companies sports a Zacks Rank #1 (Strong Buy), Acasti Pharma has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings per share estimates for Bausch Health Companies have increased from $3.28 to $3.35 for 2023 and from $3.70 to $3.78 for 2024 in the past 30 days. Shares of BHC have surged 14.2% year to date.
Loss per share estimates for Acasti Pharma have narrowed from $1.97 to $1.44 for 2023 and from $1.70 to $1.29 for 2024 in the past 30 days. Shares of ACST have declined 18.5% year to date. Earnings of Acasti Pharma beat estimates in the past three quarters, the average surprise being 46.11%.