Teva Q3 Earnings Fall Short Of Expectations; Reaffirms FY21 Guidance

Teva Pharmaceutical Industries Ltd's TEVA Q3 sales reached $3.89 billion, shrinking 2% Y/Y or 3% in local currency terms, missing the consensus of $4.03 billion. The decrease was mainly due to lower revenues in the North America segment, related primarily to Copaxone and generic products. 

Generic products revenues in the North America segment decreased 7% to $859 million, mainly due to increased competition and lower volumes.

Revenues continued to be affected by the ongoing impact of the COVID-19 pandemic on markets and customer stocking & purchasing patterns.

Adjusted EPS of $0.59 missed the Wall Street estimate of $0.65.

The adjusted gross margin improved to 53.6% from 52.4% a year ago. Adjusted operating income increased 2% to $1.04 billion, mainly due to higher profit in Europe and International Markets segments.

Adjusted EBITDA increased 1% to $1.15 billion. Teva generated an operating cash flow of $529 million, with a free cash flow of $795 million.

Outlook: Teva reaffirmed FY21 revenue outlook of $16 billion - $16.4 billion, with adjusted EPS of $2.50 - $2.70. It expects a $2.0 - $2.3 billion free cash flow and an adjusted EBITDA of $4.8 - $5.1 billion.

Separately, Teva and MODAG GmbH announced a worldwide licensing and development collaboration for MODAG's lead compound anle138b and a related compound, sery433. The companies will jointly develop the compounds for multiple system atrophy and Parkinson's disease and explore additional indications.

Teva also plans to sell $3.5 billion of sustainability-linked senior notes due 2022-2024. CEO Kåre Schultz said the company doesn't plan to do any M&A deals unless the debt is reduced further

Price Action: TEVA shares are down 1.49% at $9.25 during the premarket session on the last check Wednesday.

Image by Arek Socha from Pixabay