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TEVA Q2 Earnings Beat, Generic Business Drives Sales, Stock Up
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Teva Pharmaceutical Industries (TEVA - Free Report) reported second-quarter 2024 adjusted earnings of 61 cents per share, which beat the Zacks Consensus Estimate of 57 cents. Adjusted earnings rose 9% from 56 cents reported in the year-ago quarter.
Revenues for the second quarter came in at $4.16 billion, which beat the Zacks Consensus Estimate of $3.99 billion. Total revenues rose 7% on a reported basis and 11% on a constant currency basis. Sales growth was mainly driven by higher revenues from generic products globally and the branded drug Austedo in the United States and international markets.
Revenue growth was partially offset by unfavorable exchange rate fluctuations, including hedging effects, during the reported quarter compared with the year-ago quarter.
The stock gained 6.2% on Jul 31 as the investors cheered the better-than-expected results, along with the raised financial outlook for 2024. Year to date, shares of TEVA have surged 67% compared with the industry’s growth of 11.6%.
Image Source: Zacks Investment Research
Segment Discussion
Sales in the United States segment (previously the North America segment) were $2.11 billion, up 12% year over year, driven by higher sales of generic products and Austedo, partially offset by lower sales of Bendeka/Treanda and Anda. The segment’s revenues beat the Zacks Consensus Estimate of $1.89 billion as well as our model estimate of $1.75 billion.
Generic/biosimilar product revenues rose 16% from the year-ago period to $1.02 billion in the United States segment due to increased revenues from a generic version of Revlimid and the launch of a generic version of Novo Nordisk’s (NVO - Free Report) Victoza. The uptick was partially offset by increased competitive pressure. Teva launched liraglutide injection 1.8mg, a biosimilar version of Novo Nordisk’s diabetes drug, Victoza, in late June. Generic revenues beat our model estimate of $760 million as well as the Zacks Consensus Estimate of $858 million.
In February, Teva and partner Alvotech announced FDA approval of Simlandi injection, a biosimilar version of AbbVie’s (ABBV - Free Report) blockbuster immunology drug Humira. Simlandi injection is the first interchangeable high-concentration, citrate-free biosimilar to AbbVie’s Humira. In May 2024, Teva launched Simlandi in the United States. In April, the FDA approved Teva and Alvotech’s Selarsdi, a biosimilar version of J&J’s (JNJ - Free Report) blockbuster immunology drug, Stelara. Per a settlement with J&J, Selarsdi is expected to be launched in February 2025.
Huntington's disease drug, Austedo, recorded sales of $407 million in the United States, up 32% year over year. Sales were mainly driven by volume growth as prescription trends continued to grow along with investments made to meet demand. The launch of Austedo extended-release tablets, its once-a-day formulation, in May 2023 boosted volumes. Austedo sales beat our model estimate of $321 million as well as the Zacks Consensus Estimate of $371 million.
Ajovy recorded sales of $42 million for the quarter, decreasing 20% year over year due to a non-recurring item that drove up sales allowance. Ajovy’s market share in the United States increasedin terms of the total number of prescriptions, from 25.1% in the year-ago quarter to 28.6% in the reported quarter. Ajovy sales missed our model estimate of $49 million as well as the Zacks Consensus Estimate of $54 million.
Copaxone recorded sales of $81 million in the United States, up 44% year over year, fueled by a non-recurring item that decreased sales allowance. Copaxone sales surpassed our model estimate of $37 million as well as the Zacks Consensus Estimate of $34 million.
Combined sales of Bendeka and Treanda declined 39% from the year-ago quarter to $41 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 5% year over year in the quarter to $373 million due to lower demand.
The Europe segment recorded revenues of $1.21 billion, up 4% year over year on a reported basis and 5% on a constant currency basis, mainly driven by higher revenues from generic products and Ajovy. Europe revenues slightly missed the Zacks Consensus Estimate of $1.22 billion but beat our model estimate of $1.20 billion.
Generic product revenues in Europe rose 8% in constant currency terms to $970 million, mainly driven by higher prices in certain markets, as well ashigher revenues from recently launched products. Copaxone sales declined 9% to $53 million. Revenues from Ajovy sales increased 34% on a constant currency basis to $52 million, driven by higher volumes.
In the International Markets segment, sales rose 3% year over year to $593 million. In constant currency terms, sales increased 22% from a year ago, driven mainly by higher generic revenues. International Markets revenues missed the Zacks Consensus Estimate of $631 million.
The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $249 million, up 2% year over year on a reported basis as well as on a constant currency basis.
Margin Discussion
Adjusted gross margin was 52.9% for the quarter, up 70 basis points (bps) year over year, mainly driven by a favorable product mix.
Adjusted research & development expenses rose 12% year over year to $269 million due to higher costs related to late-stage immunology pipeline projects, along with immune-oncology and neuroscience (mainly neuropsychiatry) projects.
Selling and marketing expenditure rose 9% from the year-ago level to $656 million. General and administrative expenses declined 8% from the prior-year level to $283 million.
Adjusted operating margin decreased 80 bps to 25.3% in the quarter due to higher operational expenses, partially offset by higher gross profit margin.
Teva Pharmaceutical Industries Ltd. Price and Consensus
Teva raised its financial outlook for 2024. The company now expects net revenues in the band of $16-$16.4 billion compared with the previously expected range of $15.7-$16.3 billion. This signals year-over-year growth of 1-3% from the reported figure in 2023.
The company expects Austedo sales to be $1.6 billion in 2024 compared with $1.5 billion estimated earlier. Teva also raised its Copaxone revenue guidance to $450 million for the full year compared with the previous guidance of $400 million. The revenue guidance for Ajovy sales in 2024 remains unchanged at $500 million.
Teva expects its adjusted EPS in the band of $2.30-$2.50 per share compared with the previous guidance of $2.20-$2.50 per share.
TEVA expects margins to continue to improve, driven by continuous improvement in the portfolio mix. Adjusted gross margin is estimated between 53% and 54% in 2024 and expected to gradually improve throughout the year.
The company now expects adjusted operating income in the band of $4.1-$4.5 billion compared with the previously expected range of $4-$4.5 billion. Teva expects its adjusted EBITDA in the band of $4.6-$5 billion compared with the previous guidance of $4.5-$5 billion.
Image: Bigstock
TEVA Q2 Earnings Beat, Generic Business Drives Sales, Stock Up
Teva Pharmaceutical Industries (TEVA - Free Report) reported second-quarter 2024 adjusted earnings of 61 cents per share, which beat the Zacks Consensus Estimate of 57 cents. Adjusted earnings rose 9% from 56 cents reported in the year-ago quarter.
Revenues for the second quarter came in at $4.16 billion, which beat the Zacks Consensus Estimate of $3.99 billion. Total revenues rose 7% on a reported basis and 11% on a constant currency basis. Sales growth was mainly driven by higher revenues from generic products globally and the branded drug Austedo in the United States and international markets.
Revenue growth was partially offset by unfavorable exchange rate fluctuations, including hedging effects, during the reported quarter compared with the year-ago quarter.
The stock gained 6.2% on Jul 31 as the investors cheered the better-than-expected results, along with the raised financial outlook for 2024. Year to date, shares of TEVA have surged 67% compared with the industry’s growth of 11.6%.
Image Source: Zacks Investment Research
Segment Discussion
Sales in the United States segment (previously the North America segment) were $2.11 billion, up 12% year over year, driven by higher sales of generic products and Austedo, partially offset by lower sales of Bendeka/Treanda and Anda. The segment’s revenues beat the Zacks Consensus Estimate of $1.89 billion as well as our model estimate of $1.75 billion.
Generic/biosimilar product revenues rose 16% from the year-ago period to $1.02 billion in the United States segment due to increased revenues from a generic version of Revlimid and the launch of a generic version of Novo Nordisk’s (NVO - Free Report) Victoza. The uptick was partially offset by increased competitive pressure. Teva launched liraglutide injection 1.8mg, a biosimilar version of Novo Nordisk’s diabetes drug, Victoza, in late June. Generic revenues beat our model estimate of $760 million as well as the Zacks Consensus Estimate of $858 million.
In February, Teva and partner Alvotech announced FDA approval of Simlandi injection, a biosimilar version of AbbVie’s (ABBV - Free Report) blockbuster immunology drug Humira. Simlandi injection is the first interchangeable high-concentration, citrate-free biosimilar to AbbVie’s Humira. In May 2024, Teva launched Simlandi in the United States. In April, the FDA approved Teva and Alvotech’s Selarsdi, a biosimilar version of J&J’s (JNJ - Free Report) blockbuster immunology drug, Stelara. Per a settlement with J&J, Selarsdi is expected to be launched in February 2025.
Huntington's disease drug, Austedo, recorded sales of $407 million in the United States, up 32% year over year. Sales were mainly driven by volume growth as prescription trends continued to grow along with investments made to meet demand. The launch of Austedo extended-release tablets, its once-a-day formulation, in May 2023 boosted volumes. Austedo sales beat our model estimate of $321 million as well as the Zacks Consensus Estimate of $371 million.
Ajovy recorded sales of $42 million for the quarter, decreasing 20% year over year due to a non-recurring item that drove up sales allowance. Ajovy’s market share in the United States increasedin terms of the total number of prescriptions, from 25.1% in the year-ago quarter to 28.6% in the reported quarter. Ajovy sales missed our model estimate of $49 million as well as the Zacks Consensus Estimate of $54 million.
Copaxone recorded sales of $81 million in the United States, up 44% year over year, fueled by a non-recurring item that decreased sales allowance. Copaxone sales surpassed our model estimate of $37 million as well as the Zacks Consensus Estimate of $34 million.
Combined sales of Bendeka and Treanda declined 39% from the year-ago quarter to $41 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 5% year over year in the quarter to $373 million due to lower demand.
The Europe segment recorded revenues of $1.21 billion, up 4% year over year on a reported basis and 5% on a constant currency basis, mainly driven by higher revenues from generic products and Ajovy. Europe revenues slightly missed the Zacks Consensus Estimate of $1.22 billion but beat our model estimate of $1.20 billion.
Generic product revenues in Europe rose 8% in constant currency terms to $970 million, mainly driven by higher prices in certain markets, as well ashigher revenues from recently launched products. Copaxone sales declined 9% to $53 million. Revenues from Ajovy sales increased 34% on a constant currency basis to $52 million, driven by higher volumes.
In the International Markets segment, sales rose 3% year over year to $593 million. In constant currency terms, sales increased 22% from a year ago, driven mainly by higher generic revenues. International Markets revenues missed the Zacks Consensus Estimate of $631 million.
The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $249 million, up 2% year over year on a reported basis as well as on a constant currency basis.
Margin Discussion
Adjusted gross margin was 52.9% for the quarter, up 70 basis points (bps) year over year, mainly driven by a favorable product mix.
Adjusted research & development expenses rose 12% year over year to $269 million due to higher costs related to late-stage immunology pipeline projects, along with immune-oncology and neuroscience (mainly neuropsychiatry) projects.
Selling and marketing expenditure rose 9% from the year-ago level to $656 million. General and administrative expenses declined 8% from the prior-year level to $283 million.
Adjusted operating margin decreased 80 bps to 25.3% in the quarter due to higher operational expenses, partially offset by higher gross profit margin.
Teva Pharmaceutical Industries Ltd. Price and Consensus
Teva Pharmaceutical Industries Ltd. price-consensus-chart | Teva Pharmaceutical Industries Ltd. Quote
Updated Outlook for 2024
Teva raised its financial outlook for 2024. The company now expects net revenues in the band of $16-$16.4 billion compared with the previously expected range of $15.7-$16.3 billion. This signals year-over-year growth of 1-3% from the reported figure in 2023.
The company expects Austedo sales to be $1.6 billion in 2024 compared with $1.5 billion estimated earlier. Teva also raised its Copaxone revenue guidance to $450 million for the full year compared with the previous guidance of $400 million. The revenue guidance for Ajovy sales in 2024 remains unchanged at $500 million.
Teva expects its adjusted EPS in the band of $2.30-$2.50 per share compared with the previous guidance of $2.20-$2.50 per share.
TEVA expects margins to continue to improve, driven by continuous improvement in the portfolio mix. Adjusted gross margin is estimated between 53% and 54% in 2024 and expected to gradually improve throughout the year.
The company now expects adjusted operating income in the band of $4.1-$4.5 billion compared with the previously expected range of $4-$4.5 billion. Teva expects its adjusted EBITDA in the band of $4.6-$5 billion compared with the previous guidance of $4.5-$5 billion.
Zacks Rank
Teva currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.