Saturday, February 24, 2024
HomeFinancial ResultsTeva Reports Better Than Expected Results

Teva Reports Better Than Expected Results

Revenues in the second quarter of 2023 were $3,878 million, an increase of 2% compared to the second quarter of 2022. In local currency terms, revenues increased by 4%, mainly due to higher revenues from AUSTEDO and Anda in our North America segment and from generic products in our International Markets segment, partially offset by lower revenues from generic products and from COPAXONE® in our North America segment as well as from API sales to third parties.

Exchange rate movements during the second quarter of 2023, including hedging effects, negatively impacted our revenues by $51 million compared to the second quarter of 2022. Exchange rate movements during the second quarter of 2023, including hedging effects, negatively impacted our operating income and non-GAAP operating income by $38 million and $37 million, respectively, compared to the second quarter of 2022.

Gross profit was $1,796 million in the second quarter of 2023, flat compared to the second quarter of 2022. Gross profit margin was 46.3% in the second quarter of 2023, compared to 47.4% in the second quarter of 2022. Non-GAAP gross profit was $2,023 million in the second quarter of 2023, a decrease of 2% compared to the second quarter of 2022. Non-GAAP gross profit margin was 52.2% in the second quarter of 2023, compared to 54.4% in the second quarter of 2022. This decrease in both gross profit margin and non-GAAP gross profit margin was mainly driven by rising costs due to inflationary and other macroeconomic pressures, an increase in revenues with lower profitability from Anda in our North America segment and lower revenues from COPAXONE, partially offset by higher revenues from AUSTEDO.

Research and Development (R&D) expenses in the second quarter of 2023 were $240 million, an increase of 5% compared to $228 million in the second quarter of 2022. Our higher R&D expenses in the second quarter of 2023, compared to the second quarter of 2022, were mainly due to an increase in neuroscience (mainly neuropsychiatry), in immunology and immuno-oncology, as well as in various generics and biosimilar products.

Selling and Marketing (S&M) expenses in the second quarter of 2023 were $603 million, an increase of 2% compared to the second quarter of 2022.

General and Administrative (G&A) expenses in the second quarter of 2023 were $307 million, a decrease of 2% compared to the second quarter of 2022.

Other income in the second quarter of 2023 was $33 million, compared to $34 million in the second quarter of 2022. Other income in the second quarter of 2023 included a capital gain from the sale of assets related to our International Markets segment. Other income in the second quarter of 2022 was mainly related to a capital gain related to the sale of an R&D site.

Operating loss in the second quarter of 2023 was $646 million, compared to an operating loss of $949 million in the second quarter of 2022. Operating loss as a percentage of revenues was 16.7% in the second quarter of 2023, compared to an operating loss as a percentage of revenues of 25.1% in the second quarter of 2022. The lower operating loss and operating loss margin in the second quarter of 2023 were mainly due to higher legal settlements and loss contingencies in the second quarter of 2022. Non-GAAP operating income in the second quarter of 2023 was $1,011 million representing a non-GAAP operating margin of 26.1% compared to non-GAAP operating income of $1,019 million representing a non-GAAP operating margin of 26.9% in the second quarter of 2022. The decrease in non-GAAP operating margin in the second quarter of 2023 was mainly impacted by lower non-GAAP gross profit margin, as discussed above, partially offset by a decrease in operating expenses.

Adjusted EBITDA was $1,125 million in the second quarter of 2023, flat compared to $1,134 million in the second quarter of 2022.

Financial expenses, net in the second quarter of 2023 were $268, mainly comprised of net-interest expenses of $240 million. In the second quarter of 2022, financial expenses were $211 million, mainly comprised of net-interest expenses of $229 million, partially offset by a positive exchange rate impact driven mainly from currencies which we were unable to hedge, such as the Russian ruble.

In the second quarter of 2023, we recognized a tax benefit of $16 million on a pre-tax loss of $914 million. Teva’s tax rate for the second quarter of 2023 was mainly affected by impairments, legal settlements, amortization, and interest expense disallowances. In the second quarter of 2022, we recognized a tax benefit of $900 million on a pre-tax loss of $1,160 million, mainly due to the realization of losses related to an investment in one of our U.S. subsidiaries.

Non-GAAP tax rate in the second quarter of 2023 was 15.2%, compared to 7.7% in the second quarter of 2022. Our non-GAAP tax rate in the second quarter of 2023 was mainly affected by the generation of profits in various jurisdictions with different tax rates, interest expense disallowances, tax benefits in Israel and other countries, as well as infrequent or non-recurring items. Our non-GAAP tax rate in the second quarter of 2022 was mainly affected by a portion of the realization of losses related to an investment in one of our U.S. subsidiaries, as well as the mix of products we sold and interest expense disallowances.

We expect our annual non-GAAPtax rate for 2023 to be between 14%-17%, higher than our non-GAAP tax rate for 2022, which was 11.7%, mainly due to the effect of a portion of the realization of losses related to an investment in one of our U.S. subsidiaries in 2022.

Net loss attributable to Teva and loss per share in the second quarter of 2023 were $863 million and $0.77, respectively, compared to $232 million and $0.21, respectively, in the second quarter of 2022. The higher net loss in the second quarter of 2023 was mainly due to lower tax benefit, partially offset by lower operating loss, as discussed above. Non-GAAP net income attributable to Teva and non-GAAP diluted earnings per share in the second quarter of 2023 were $629 million and $0.56, respectively, compared to $754 million and $0.68, respectively, in the second quarter of 2022.

As of June 30, 2023 and 2022, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,157 million and 1,144 million, respectively.

Non-GAAP information: net non-GAAP adjustments in the second quarter of 2023 were $1,492 million. Non-GAAP net income attributable to Teva and non-GAAP diluted EPS for the second quarter of 2023 were adjusted to exclude the following items:

  • Amortization of purchased intangible assets of $162 million, of which $145 million is included in cost of sales and the remaining $16 million in S&M expenses;
  • Impairment of long-lived assets of $74 million;
  • Goodwill impairment of $700 million;
  • Legal settlements and loss contingencies of $462 million;
  • Contingent consideration expenses of $70 million;
  • Equity compensation expenses of $30 million;
  • Restructuring expenses of $10 million;
  • Accelerated depreciation of $24 million;
  • Financial expenses of $16 million;
  • Costs related to regulatory actions taken in facilities of $1 million;
  • Other non-GAAP items of $123 million;
  • Items attributable to non-controlling interests of $49 million; and
  • Corresponding tax effects and unusual tax items of $131 million.

We believe that excluding such items facilitates investors’ understanding of our business including underlying performance trends, thereby improving the comparability of our business performance results between reporting periods.

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments