Generic Drug Player Teva Pharma To Divest Its Active Pharmaceutical Ingredient Business, Q4 Earnings Surpass Estimates

Teva Pharmaceutical Industries Ltd TEVA reported fourth-quarter 2023 sales of $4.46 billion, beating the consensus of $3.99 billion.

This increase was mainly due to an upfront payment of $500 million in connection with the collaboration on anti-TL1A asset, the sale of certain product rights, higher revenues from generic products in the International Markets segment and Austedo, partially offset by lower revenues from generic products in North America segment and Copaxone.

The company reported fourth-quarter adjusted EPS of $1.00, higher than $0.71 a year ago, beating the consensus of $0.76.

The adjusted gross profit was $2.6 billion in the fourth quarter of 2023, up 23% Y/Y, with an adjusted gross profit margin of 58.2% compared to 54.2% a year ago, mainly driven by an upfront payment received in connection with the anti-TL1A asset collaboration and a favorable mix of products in the North America segment, partially offset by inflationary and other macroeconomic pressures.

Adjusted operating margin reached 34.7% from 29.1% a year ago. Adjusted EBITDA increased to $1.66 billion from $1.24 billion a year ago.

Teva announced its intention to divest its active-pharmaceutical ingredient (API) business, offering small-molecule APIs, with approximately 4,300 employees.

The move allows Teva to maximize current and potential revenue streams. Teva expects the intended divestiture to be completed in the first half of 2025.

Outlook: Teva expects fiscal year 2024 revenues of $15.7 billion-$16.3 billion, with adjusted EPS of $2.20-$2.50 versus consensus of $15.48 billion and $2.40, respectively.

The company sees adjusted operating income of $4.0 billion-$4.5 billion, with adjusted EBITDA of $4.5 billion-$5.0 billion and free cash flow of $1.7 billion-$2.0 billion.

Price Action: TEVA shares are up 2.43% at $12.02 on the last check Wednesday.