Teva Announces Strong Growth in Second Quarter Revenues mainly driven by Generics Products in All Regions and AUSTEDO®; Raises 2024 Financial Guidance

For an accessible version of this Press Release, please visit www.tevapharm.com

• Q2 2024 revenues of $4.2 billion reflecting an increase of 7% in U.S. dollars or 11% in local currency terms compared to Q2 2023.
• Generics business grows across all regions – increased in local currency terms by 16% in the U.S., 8% in Europe and 22% in International Markets, compared to Q2 2023.
• AUSTEDO – continued growth, U.S. revenue of $407 million in Q2 2024, an increase of 32% compared to Q2 2023; raising 2024 revenue outlook to ~$1.6 billion.
• AJOVY^® – global revenues of $115 million in Q2 2024, an increase of 12% in local currency terms compared to Q2 2023.
• Announced acceleration of development timeline for duvakitug (Anti-TL1A) – top-line results now expected in Q4 2024, with full data expected next year.
• Announced positive Phase 3 efficacy results for olanzapine LAI (TEV' 749); so far completed ~95% of target injections with no PDSS observed.
• SIMLANDI^® (adalimumab-ryvk) injection launched in May 2024 as an interchangeable biosimilar to Humira^®.
• SELARSDI™ (ustekinumab-aekn) injection for subcutaneous use, preparing for February 2025 launch as a biosimilar to Stelara^®.

Q2 2024 Highlights:

• Revenues of $4.2 billion
• GAAP loss per share of $0.75
• Non-GAAP diluted EPS of $0.61
• Cash flow generated from operating activities of $103 million
• Free cash flow of $324 million
• Building on Teva's strong performance in the first half of2024 and expected developments in the second half of the year, Teva's full year 2024 business outlook is raised to:
  • Revenues of $16.0 - $16.4 billion
  • AUSTEDO revenues of ~$1.6 billion
  • Adjusted EBITDA of $4.6 - $5.0 billion
  • Non-GAAP diluted EPS of $2.30 - $2.50

TEL AVIV, Israel, July 31, 2024 (GLOBE NEWSWIRE) -- Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today reported results for the quarter ended June 30, 2024.

Mr. Richard Francis, Teva's President and CEO, said, "In the second quarter of 2024, we are encouraged by the positive momentum across each of the four pillars of our Pivot to Growth strategy. Teva's global revenues of $4.2 billion increased by 7% in U.S. dollars, or 11% in local currency terms compared to the second quarter of 2023, delivering strong growth driven mainly by our generics and innovative business, with AUSTEDO growing 32% in the U.S. compared to Q2 2023."

Mr. Francis continued, "We are also showing significant progress in on our late-stage innovative pipeline, underscored by the acceleration of the development timeline of duvakitug (Anti-TL1A), with top-line results now expected in the fourth quarter of 2024, and full data expected next year.

"With these robust results, we are raising our financial guidance for 2024."

Pivot to Growth Strategy

In May 2023, we introduced our “Pivot to Growth” strategy, which is based on four key pillars: (i) delivering on our growth engines, mainly AUSTEDO, AJOVY, UZEDY^® and our late-stage pipeline of biosimilars; (ii) stepping up innovation through delivering on our late-stage innovative pipeline assets as well as building up our early-stage pipeline organically and potentially through business development activities; (iii) sustaining our generics medicines powerhouse with a global commercial footprint, focused portfolio, pipeline and manufacturing footprint; and (iv) focusing our business by optimizing our portfolio and global manufacturing footprint to enable strategic capital deployment to accelerate our near and long-term growth engines and reorganizing certain of our business units to a more optimal structure, while also reorganizing key business units to enhance operational efficiency.

Second Quarter 2024 Consolidated Results⁽¹⁾

Revenues in the second quarter of 2024 were $4,164 million, an increase of 7% in U.S. dollars or 11% in local currency terms compared to the second quarter of 2023. This increase was mainly due to higher revenues from generic products in all our segments, and from AUSTEDO in our United States and International Markets segments.

Exchange rate movements during the second quarter of 2024, including hedging effects, negatively impacted overall revenues by $122 million compared to the second quarter of 2023. Exchange rate movements during the second quarter of 2024, including hedging effects, negatively impacted our operating income and non-GAAP operating income each by $56 million compared to the second quarter of 2023.

Gross profit in the second quarter of 2024 was $2,024 million, an increase of 13% compared to $1,796 million in the second quarter of 2023. Gross profit margin was 48.6% in the second quarter of 2024, compared to 46.3% in the second quarter of 2023. Non-GAAP gross profit was $2,205 million in the second quarter of 2024, an increase of 9% compared to $2,023 million in the second quarter of 2023. Non-GAAP gross profit margin was 52.9% in the second quarter of 2024, compared to 52.2% in the second quarter of 2023. The increase in both gross profit margin and non-GAAP gross profit margin was mainly due to a favorable mix of products, primarily driven by growth in AUSTEDO revenues.

Research and Development (R&D) expenses, net in the second quarter of 2024 were $269 million, an increase of 12% compared to $240 million in the second quarter of 2023 as we continue to execute on our Pivot to Growth Strategy. Our higher R&D expenses, net in the second quarter of 2024, compared to the second quarter of 2023, were mainly due to an increase related to our late-stage innovative pipeline in immunology, as well as related to immuno-oncology and neuroscience projects.

Selling and Marketing (S&M) expenses in the second quarter of 2024 were $656 million, an increase of 9% compared to the second quarter of 2023. This increase was mainly due to promotional activities in our innovative products.

General and Administrative (G&A) expenses in the second quarter of 2024 were $283 million, a decrease of 8% compared to the second quarter of 2023, mainly due to lower litigation costs in the second quarter of 2024.

Other income in the second quarter of 2024 was $2 million, compared to $33 million in the second quarter of 2023. Other income in the second quarter of 2023 included a capital gain from the sale of assets related to our International Markets segment.

Operating loss in the second quarter of 2024 was $5 million, compared to an operating loss of $654 million in the second quarter of 2023. Operating loss as a percentage of revenues was 0.1% in the second quarter of 2024, compared to 16.9% of revenues in the second quarter of 2023. The higher operating loss in the second quarter of 2023 was mainly due to higher legal settlements and loss contingencies as well as higher goodwill impairment charges. Non-GAAP operating income in the second quarter of 2024 was $1,056 million representing a non-GAAP operating margin of 25.3% compared to non-GAAP operating income of $1,011 million representing a non-GAAP operating margin of 26.1% in the second quarter of 2023. The decrease in non-GAAP operating margin in the second quarter of 2024 was mainly due to higher operational expenses as a percentage of revenues, partially offset by higher gross profit margin.

Financial expenses, net in the second quarter of 2024 were $241 million, mainly comprised of net-interest expenses of $233 million. In the second quarter of 2023, financial expenses, net were $268 million, mainly comprised of net-interest expenses of $240 million.

In the second quarter of 2024, we recognized a tax expense of $630 million, on a pre-tax loss of $246 million. Our tax rate for the second quarter of 2024 was mainly affected by a settlement agreement with the Israeli Tax Authorities (“ITA”) and impairments. The settlement agreement with the ITA resulted in an increase of $506 million in Teva's total income taxes in the second quarter of 2024, as certain elements had been recognized in previous periods. For additional information on the settlement agreement, see our Current Report on Form 8-K filed with the SEC on June 25, 2024. In the second quarter of 2023, we recognized a tax benefit of $16 million, on a pre-tax loss of $923 million. Our tax rate for the second quarter of 2023 was mainly affected by impairments, legal settlements, amortization, and interest expense disallowances. Non-GAAP tax rate in the second quarter of 2024 was 15.4%, compared to 15.2% in the second quarter of 2023. Our non-GAAP tax rate in the second quarter of 2024 was mainly affected by the generation of profits in various jurisdictions with different tax rates, 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 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.

We expect our annual non-GAAP tax rate for 2024 to be between 14%-17%, higher than our non-GAAP tax rate for 2023, which was 13%, mainly due to a reduced net tax benefit related to deferred tax resulting from intellectual property related integration plans in 2024 compared to 2023.

Net loss attributable to Teva and loss per share in the second quarter of 2024 were $846 million and $0.75, respectively, compared to net loss attributable to Teva and loss per share of $872 million and $0.78, respectively, in the second quarter of 2023. The lower net loss in the second quarter of 2024 was mainly due to lower operating loss, partially offset by higher income taxes, as discussed above. Non-GAAP net income attributable to Teva and non-GAAP diluted earnings per share in the second quarter of 2024 were $697 million and $0.61, respectively, compared to $629 million and $0.56, respectively, in the second quarter of 2023.

Adjusted EBITDA was $1,168 million in the second quarter of 2024, an increase of 4%, compared to $1,125 million in the second quarter of 2023.

As of June 30, 2024 and 2023, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,167 million shares and 1,157 million shares, respectively.

Non-GAAP information: net non-GAAP adjustments in the second quarter of 2024 were $1,542 million. Non-GAAP net income attributable to Teva and non-GAAP diluted EPS for the second quarter of 2024 were adjusted to exclude the following items:

• Amortization of purchased intangible assets of $146 million, of which $135 million is included in cost of sales and the remaining $11 million in S&M expenses;

• Impairment of long-lived assets of $130 million;

• Goodwill impairment charge of $400 million related to the Teva API reporting unit;

• Legal settlements and loss contingencies of $83 million;

• Contingent consideration expenses of $192 million, which primarily consisted of $174 million related to a change in the estimated future royalty payments to Allergan in connection with lenalidomide capsules (the generic version of Revlimid^®);

• Equity compensation expenses of $32 million;

• Restructuring expenses of $18million;

• Financial expenses of $12 million;

• Other non-GAAP items of $59 million;

• Items attributable to non-controlling interests of$33 million; and

• Corresponding tax effects and unusual tax items of $503 million, of which $495 million is related to the settlement agreement with the ITA discussed above.

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.

For a reconciliation of the U.S. GAAP results to the adjusted non-GAAP figures and for additional information, see the tables below and the information included under “Non-GAAP Financial Measures.” Investors should consider non-GAAP financial measures in addition to, and not as replacement for, or superior to, measures of financial performance prepared in accordance with GAAP.

Cash flow generated from operating activities during the second quarter of 2024 was $103 million, compared to $324 million of cash flow generated from operating activities in the second quarter of 2023. The lower cash flow generated from operating activities in the second quarter of 2024 resulted mainly from changes in working capital items, including a negative impact from accounts receivables, net of SR&A, driven mainly from higher sales during the second quarter of 2024 with extended payment terms into the third quarter, and from accounts payables, as well as higher tax payments.

During the second quarter of 2024, we generated free cash flow of $324 million, which we define as comprising $103 million in cash flow generated from operating activities, $317 million in beneficial interest collected in exchange for securitized accounts receivables (under our EU securitization program) and $1 million in divestitures of businesses and other assets, partially offset by $97 million in cash used for capital investment. During the second quarter of 2023, we generated free cash flow of $632 million, which we define as comprising $324 million in cash flow generated from operating activities, $371 million in beneficial interest collected in exchange for securitized accounts receivables (under our EU securitization program) and $56 million in proceeds from divestitures of businesses and other assets, partially offset by $119 million in cash used for capital investment. The decrease in free cash flow in the second quarter of 2024, resulted mainly from lower cash flow generated from operating activities, as well as lower proceeds from divestitures of businesses and other assets.

As of June 30, 2024, our debt was $18,640 million, compared to $19,833 million as of December 31, 2023. This decrease was mainly due to repayment of $956 million of 6% senior notes at maturity and a positive impact of $247 million from exchange rate fluctuations. The portion of total debt classified as short-term as of June 30, 2024 was 11% compared to 8% as of December 31, 2023. Our average debt maturity was approximately 5.8 years as of June 30, 2024, compared to 6.0 years as of December 31, 2023.

_________

⁽¹⁾ The data presented in this press release with respect to comparative periods include revised figures. For additional information, see note 1b to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 and note 1c to our consolidated financial statements included in our Quarterly Report on Form 10-Q for the period ended June 30, 2024.

Segment Results for the Second Quarter of 2024

United States Segment

As part of the previously announced shift in executive management responsibilities and in line with our Pivot to Growth strategy, commencing January 1, 2024, Canada is reported as part of our International Markets segment. Prior period amounts were recast to reflect this change.

The following table presents revenues, expenses and profit for our United States segment for the three months ended June 30, 2024 and 2023:

Revenues from our United States segment in the second quarter of 2024 were $2,110 million, an increase of $218 million, or 12%, compared to the second quarter of 2023. This increase was mainly due to higher revenues from generic products, AUSTEDO and COPAXONE^®, partially offset by lower revenues from certain innovative products, primarily BENDEKA^® and TREANDA^®, as well as from Anda, our distribution business.

Revenues by Major Products and Activities

The following table presents revenues for our United States segment by major products and activities for the three months ended June 30, 2024 and 2023:

Generic products revenues in our United States segment (including biosimilars) in the second quarter of 2024 were $1,023 million, an increase of 16% compared to the second quarter of 2023, the majority of which was driven by higher revenues from lenalidomide capsules (the generic version of Revlimid^®), and the remaining primarily by the launch of liraglutide injection 1.8mg (an authorized generic of Victoza^®), partially offset by increased competition to other generic products.

Among the most significant generic products we sold in the United States in the second quarter of 2024 were lenalidomide capsules (the generic version of Revlimid^®), epinephrine injectable solution (the generic version of EpiPen^® and EpiPen Jr^®), liraglutide injection (an authorized generic of Victoza^®), and Truxima^® (the biosimilar to Rituxan^®). In the second quarter of 2024, our total prescriptions were approximately 303 million (based on trailing twelve months), representing 7.9% of total U.S. generic prescriptions, compared to approximately 319 million (based on trailing twelve months), representing 8.4% of total U.S. generic prescriptions in the second quarter of 2023, all according to IQVIA data.

On February 24, 2024, Alvotech and Teva announced that the FDA approved SIMLANDI (adalimumab-ryvk) injection, as an interchangeable biosimilar to Humira^®, for the treatment of adult rheumatoid arthritis, juvenile idiopathic arthritis, adult psoriatic arthritis, adult ankylosing spondylitis, Crohn’s disease, adult ulcerative colitis, adult plaque psoriasis, adult hidradenitis suppurativa and adult uveitis. On April 17, 2024, Alvotech and Teva amended their collaboration agreement to enable the purchase by Quallent of a private label adalimumab-ryvk injection from Alvotech for the U.S. market, with Alvotech sharing profits with Teva on the private label sales. On May 20, 2024, Alvotech and Teva announced that SIMLANDI is available in the United States.

On April 16, 2024, Alvotech and Teva announced that the FDA has approved SELARSDI (ustekinumab-aekn) injection for subcutaneous use, as a biosimilar to Stelara^®, for the treatment of moderate to severe plaque psoriasis and for active psoriatic arthritis in adults and pediatric patients six years and older.

On June 24, 2024, Teva announced the launch of liraglutide injection 1.8mg (an authorized generic of Victoza^®) in the United States. Liraglutide injection is indicated to improve glycemic control in adults and pediatric patients aged 10 years and older with type 2 diabetes mellitus and reduce the risk of cardiovascular events in adults with type 2 diabetes mellitus and established cardiovascular disease.

AJOVY revenues in our United States segment in the second quarter of 2024 were $42 million, a decrease of 20% compared to $52 million in the second quarter of 2023, mainly due to an increase in sales allowance due to a non-recurring item, partially offset by higher demand. In the second quarter of 2024, AJOVY’s exit market share in the United States in terms of total number of prescriptions was 28.6% compared to 25.1% in the second quarter of 2023.

AUSTEDO revenues in our United States segment in the second quarter of 2024 increased by 32%, to $407 million, compared to $308 million in the second quarter of 2023, mainly due to growth in volume, as well as expanded access for patients and increased investment to support higher demand.

AUSTEDO XR (deutetrabenazine) extended-release tablets was approved by the FDA on February 17, 2023, and became commercially available in the U.S. in May 2023. In May 2024, the FDA approved AUSTEDO XR as a one pill, once-daily treatment option in doses of 30, 36, 42, and 48 mg. In July 2024, the FDA approved the 18 mg dosage for AUSTEDO XR making it a one pill, once-daily for all available doses. AUSTEDO XR is a once-daily formulation indicated in adults for tardive dyskinesia and chorea associated with Huntington’s disease, which is additional to the currently marketed twice-daily AUSTEDO. AUSTEDO XR is protected by ten Orange Book patents expiring between 2031 and 2041.

UZEDY (risperidone) extended-release injectable suspension was approved by the FDA on April 28, 2023 for the treatment of schizophrenia in adults, and was launched in the U.S. in May 2023. UZEDY is a subcutaneous, long-acting formulation of risperidone that controls the steady release of risperidone. UZEDY is protected by nine Orange Book patents expiring between 2025 and 2033. We are moving forward with plans to launch UZEDY in other countries around the world. UZEDY faces competition from multiple other products.

BENDEKA and TREANDA combined revenues in our United States segment in the second quarter of 2024 were $41 million, a decrease of 39% compared to $67 million in the second quarter of 2023, mainly due to generic bendamustine products entry into the market. The orphan drug exclusivity that had attached to bendamustine products expired in December 2022.

COPAXONE revenues in our United States segment in the second quarter of 2024 were $81 million, an increase of 44% compared to $56 million in the second quarter of 2023, mainly due to a decrease in sales allowance due to a non-recurring item.

Anda revenues from third-party products in our United States segment in the second quarter of 2024 were $373 million, a decrease of 5% compared to $392 million in the second quarter of 2023, mainly due to lower demand in the second quarter of 2024. Anda, our distribution business in the United States, distributes generic and innovative medicines and OTC pharmaceutical products from Teva and various third-party manufacturers to independent retail pharmacies, pharmacy retail chains, hospitals and physician offices in the United States. Anda is able to compete in the distribution market by maintaining a broad portfolio of products, competitive pricing and delivery throughout the United States.

United States Gross Profit

Gross profit from our United States segment in the second quarter of 2024 was $1,167 million, an increase of 15%, compared to $1,017 million in the second quarter of 2023.

Gross profit margin for our United States segment in the second quarter of 2024 increased to 55.3%, compared to 53.8% in the second quarter of 2023. This increase was mainly due to a favorable mix of products primarily driven by higher revenues from lenalidomide capsules (the generic version of Revlimid^®) and AUSTEDO.

United States Profit

Profit from our United States segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our United States segment in the second quarter of 2024 was $629 million, an increase of 23% compared to $511 million in the second quarter of 2023. This increase was mainly due to higher gross profit, partially offset by higher operational expenses.

Europe Segment

Our Europe segment includes the European Union, the United Kingdom and certain other European countries.

The following table presents revenues, expenses and profit for our Europe segment for the three months ended June 30, 2024 and 2023:

Revenues from our Europe segment in the second quarter of 2024 were $1,213 million, an increase of 4%, or $50 million, compared to the second quarter of 2023. In local currency terms, revenues increased by 5% compared to the second quarter of 2023, mainly due to higher revenues from generic products and AJOVY.

Revenues by Major Products and Activities

The following table presents revenues for our Europe segment by major products and activities for the three months ended June 30, 2024 and 2023:

Generic products revenues (including OTC and biosimilar products) in our Europe segment in the second quarter of 2024, increased by 7% to $970 million, compared to the second quarter of 2023. In local currency terms, revenues increased by 8%, mainly due to price increases as a result of market conditions such as inflationary pressures in certain markets, as well as higher revenues from recently launched products.

AJOVY revenues in our Europe segment in the second quarter of 2024 increased by 33% to $52 million, compared to $39 million in the second quarter of 2023. In local currency terms revenues increased by 34%, mainly due to growth in European countries in which AJOVY had previously been launched.

COPAXONE revenues in our Europe segment in the second quarter of 2024 were $53 million, a decrease of 11% compared to the second quarter of 2023. In local currency terms, revenues decreased by 9%, due to price reductions and a decline in volume resulting from competing glatiramer acetate products and availability of alternative therapies.

Respiratory products revenues in our Europe segment in the second quarter of 2024 were $57 million, a decrease of 14% compared to the second quarter of 2023. In local currency terms, revenues decreased by 13% compared to the second quarter of 2023, mainly due to net price reductions and lower volumes.

Europe Gross Profit

Gross profit from our Europe segment in the second quarter of 2024 was $677 million, an increase of 6% compared to $640 million in the second quarter of 2023.

Gross profit margin for our Europe segment in the second quarter of 2024 increased to 55.8%, compared to 55.0% in the second quarter of 2023. This increase was mainly due to price increases of generic products as a result of market conditions such as inflationary pressures in certain markets.

Europe Profit

Profit from our Europe segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our Europe segment in the second quarter of 2024 was $342 million, an increase of 2%, compared to $334 million in the second quarter of 2023. This increase was mainly due to higher gross profit, as described above.

International Markets Segment

Our International Markets segment includes all countries in which we operate other than the United States and the countries included in our Europe segment. The International Markets segment includes more than 35 countries, covering a substantial portion of the global pharmaceutical industry.

As part of the previously announced recent shift in executive management responsibilities, commencing January 1, 2024, Canada is reported under our International Markets segment and is no longer included as part of our United States segment. Prior period amounts were recast to reflect this change.

The following table presents revenues, expenses and profit for our International Markets segment for the three months ended June 30, 2024 and 2023:

	Three months ended June 30,
	2024				2023
	(U.S. $ in millions / % of Segment Revenues)
Revenues	$	593	100%	$	578	100%
Gross profit		286	48.3%		283	49.0%
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