Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today
reported results for the year and the quarter ended December 31,
2019.
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the full release here:
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Full-Year 2019 and Q4 2019
Highlights:
FY
2019
Q4
2019
Revenues
$16.9 billion
$4.5 billion
Revenues prior to revision (*)
$17.5 billion
$4.6 billion
Cash flow from operating activities
$748 million
$538 million
Free cash flow
$2,053 million
$974 million
GAAP earnings (loss) per share
$(0.91)
$0.10
Non-GAAP EPS
$2.40
$0.62
(*)
Revision of prior period
financial statements with respect to the distribution business in
our International Markets segment, decreasing sales by $165 million
in Q4 2019, and $642 million in 2019, with an offsetting decrease
in cost of sales. No impact on gross profit, operating income,
earnings per share or cash flows for the related periods.
- Met all components of 2019 business outlook
- Achieved spend base reduction target of $3 billion
- AUSTEDO® rapid growth continues
- AJOVY® launched in Europe; auto-injector approved in U.S.
and E.U.
- Launch of TRUXIMA®, Teva’s first U.S. biosimilar
- 2020 business outlook:
- Revenues are expected to be $16.6 - $17.0 billion
- Non-GAAP EPS is expected to be $2.30 - $2.55
- Free cash flow is expected to be $1.8 - $2.2 billion
“In 2019, we made great strides towards positioning Teva for
renewed growth by completing our two-year restructuring plan,
reducing our cost base by more than $3 billion, and reducing our
net debt by more than $9 billion, all while maintaining our global
leadership in generics, serving around 200 million patients every
day,” said Mr. Kåre Schultz, Teva’s President and CEO.
“Our key growth products met major milestones in 2019, including
the launch of AJOVY® in Europe, continued strong growth for
AUSTEDO®, and the successful launch of our first biosimilar
TRUXIMA® in North America. In 2020, we expect to see continued
growth for AJOVY®, AUSTEDO® and our biosimilars.”
Mr. Schultz continued, “Looking ahead, we will further transform
our manufacturing network, improve our profitability, and generate
cash, which will further reduce our debt. We will enhance our
biopharmaceutical offerings, and expand our key assets with
additional indications and geographies.”
Revision of Previously Reported
Consolidated Financial Statements
In connection with the preparation of Teva's consolidated
financial statements for the fiscal year ended December 31, 2019,
Teva determined that in the full years and interim periods of
fiscal years 2017 and 2018, and the first three quarters of fiscal
year 2019, it had an immaterial error in the presentation of
distribution revenues from its Israeli distribution business. This
business is part of the International Markets reporting segment and
facilitates distribution of Teva and third party products to
pharmacies, hospitals and other organizations in Israel.
Specifically, the Company concluded that it presented revenue
from its Israeli distribution business on a gross basis, although
it should have reported such revenue on a net basis. Because Teva
has no discretion in establishing prices for any specifies goods or
services, limited inventory risk and is not primarily responsible
for contract fulfillment, Teva does not meet the criteria for
reporting revenues from such business as a principal (on a gross
basis), as opposed to as an agent (on a net basis).
The Company evaluated the cumulative impact of this item on its
previously issued annual financial statements for 2017 and 2018,
and the interim financial statements for 2017, 2018 and the first
three quarters of 2019, and concluded that, for the reasons
mentioned below, the revisions were not material, individually or
in the aggregate, to any of its previously-issued interim or annual
financial statements. Teva has revised its presentation of net
revenue and cost of sales in the historical consolidated financial
statements to reflect the change in this item, as described in more
detail below.
The impact of this revision is a decrease in net revenues with
an offsetting decrease in cost of sales. There is no impact on
gross profit, operating income or earnings per share. In addition,
there is no impact on Teva’s balance sheet or statement of cash
flows for the related periods.
The following table summarizes the impact of the revision on net
revenues and non-GAAP cost of sales in the consolidated statements
of income in the relevant periods:
Net revenues
Cost of sales
As reported
Adjustment
As revised
As reported
Adjustment
As revised
(U.S. $ in millions)
2017
22,385
(533)
21,853
10,351
(533)
9,818
2018
18,854
(583)
18,271
9,308
(583)
8,725
Nine months ended
September 30, 2019
12,896
(477)
12,419
6,456
(477)
5,979
The following items presented in this press release have been
adjusted to reflect the revision described above:
- 2018 and 2019 annual and fourth quarter revenues
- 2018 and 2019 annual and fourth quarter cost of sales
- 2018 and 2019 fourth quarter International Markets segment
revenues
- 2018 and 2019 fourth quarter International Markets segment cost
of sales
2019 Annual Consolidated
Results
Revenues in 2019 were $16,887 million, a decrease of
8%, or 5% in local currency terms, compared to 2018, mainly due to
generic competition to COPAXONE®, a decline in revenues from our
U.S. generics business, BENDEKA®/TREANDA® and Japan, partially
offset by higher revenues from AUSTEDO, AJOVY and QVAR® in the
United States. The data presented for prior periods have been
revised to reflect a revision in the presentation of net revenues
and cost of sales in the consolidated financial statements. See
"Revision of Previously Reported Consolidated Financial Statements"
above.
Exchange rate movements between 2019 and 2018
negatively impacted our revenues by $402 million, our GAAP
operating income by $135 million and our non-GAAP operating income
by $154 million.
GAAP gross profit was $7,537 million in 2019, a
decrease of 9% compared to 2018. GAAP gross profit
margin was 44.6% in 2019, compared to 45.4% in 2018.
Non-GAAP gross profit was $8,702 million in 2019,
a decrease of 9% compared to 2018. Non-GAAP gross profit
margin was 51.5% in 2019, compared to 52.2% in 2018. The
decrease in both GAAP and non-GAAP gross profit was mainly due to
lower revenues from COPAXONE in North America.
GAAP Research and Development
(R&D) expenses in 2019 were $1,010
million, a decrease of 17% compared to 2018.
Non-GAAP R&D expenses in 2019 were $1,004
million, or 5.9% of revenues, compared to $1,102 million, or 6.0%
of revenues, in 2018. The decrease in R&D expenses resulted
primarily from pipeline optimization and efficiencies realized as
part of our restructuring plan.
GAAP Selling and Marketing
(S&M) expenses in 2019 were $2,614
million, a decrease of 10% compared to 2018.
Non-GAAP S&M expenses were $2,438 million, or
14.4% of revenues, in 2019, compared to $2,718 million, or 14.9% of
revenues, in 2018. The decrease was mainly due to cost reductions
and efficiency measures as part of the restructuring plan.
GAAP General and Administrative (G&A)
expenses in 2019 were $1,192 million, a decrease of 8%
compared to 2018. Non-GAAP G&A expenses were
$1,145 million in 2019, or 6.8% of revenues, compared to $1,228
million, or 6.7% of revenues, in 2018. The decrease was mainly due
to cost reductions and efficiency measures as part of the
restructuring plan.
GAAP other income in 2019 was $76 million,
compared to $291 million in 2018. The other income in 2019 was
mainly related to the sale of activities in our International
Markets segment. Non-GAAP other income in 2019 was
$27 million, compared to $225 million in 2018.
Non-GAAP other income in 2018 was mainly due to
Section 8 recoveries from multiple cases in Canada and recovery of
lost profits in cases in which U.S. patent infringement litigation
had previously prevented the sale of certain products.
GAAP Operating loss was $443 million in 2019,
compared to operating loss of $1,637 million in 2018. The decrease
was mainly due to higher impairment charges recorded in 2018,
partially offset by higher provisions in connection with legal
settlements and loss contingencies in 2019, as well as lower profit
in our North America segment. Non-GAAP operating
income was $4,142 million, a decrease of 12% compared to
$4,723 million in 2018.
Adjusted EBITDA (non-GAAP operating income,
which excludes amortization and certain other items, and excluding
depreciation expenses) in 2019 was $4,685 million, compared to
$5,319 million in 2018.
In 2019, GAAP financial expenses were $822
million, compared to $959 million in 2018.
Non-GAAP financial expenses were $824 in 2019,
compared to $893 in 2018.
In 2019, we recognized a GAAP tax benefit of
$278 million, or 22%, on a pre-tax loss of $1,265 million. In 2018,
we recognized a tax benefit of $195 million, or 8%, on a pre-tax
loss of $2,596 million. Our tax rate for 2018 was lower than in
2019 due to one-time legal settlements and divestments that had a
low corresponding tax effect.
Non-GAAP income taxes for 2019 were $597
million on non-GAAP pre-tax income of $3,317 million. Non-GAAP
income taxes in 2018 were $519 million on non-GAAP pre-tax income
of $3,830 million. The non-GAAP tax rate for 2019 was 18%, compared
to 14% in 2018. Our annual non-GAAP effective tax rate for 2019 was
higher than our non-GAAP effective tax rate for 2017 and 2018
primarily due to a lower tax shield on finance expenses.
In the future, both our GAAP and non-GAAP effective tax rates
are expected to remain similar to the 2019 rate.
GAAP net loss attributable to Teva’s ordinary
shareholders and GAAP diluted loss per share in
2019 were $999 million and $0.91, respectively, compared to net
loss of $2,399 million and diluted loss per share of $2.35 in 2018.
Non-GAAP net income attributable to ordinary
shareholders for calculating diluted EPS and
non-GAAP diluted EPS in 2019 were $2,627 million
and $2.40, respectively, compared to $2,985 million and $2.92 in
2018.
The weighted average diluted shares
outstanding used for the fully diluted share calculation
on a GAAP basis for 2019 and 2018 were 1,091 million and 1,021
million shares, respectively. The weighted
average outstanding shares used for the fully
diluted EPS calculation on a non-GAAP basis for 2019 and 2018 were
1,094 million and 1,024 million shares, respectively.
As of December 31, 2019 and 2018, the fully diluted
share count for purposes of calculating our market
capitalization was approximately 1,108 million and 1,100
million shares, respectively.
Non-GAAP information: Net non-GAAP adjustments in 2019
were $3,625 million. Non-GAAP net income and non-GAAP EPS for the
year were adjusted to exclude the following items:
- An impairment of intangible and fixed assets of 1,778 million,
mainly related to the acquisition of Actavis Generics;
- Legal settlements and loss contingencies of $1,178 million,
mainly related to the reserve in connection with the opioids
cases;
- Amortization of purchased intangible assets totaling $1,113
million, of which $973 million is included in cost of goods sold
and the remaining $139 million in selling and marketing
expenses;
- Restructuring expenses of $199 million;
- Equity compensation expenses of $123 million;
- Contingent consideration of $59 million;
- Other non-GAAP items of $132 million;
- Minority interest adjustment of $82; and
- Related tax effect of $875 million.
Teva believes that excluding such items facilitates investors’
understanding of its business. For further information see the
tables below for a reconciliation of the U.S. GAAP results to the
adjusted non-GAAP figures and the information 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 in
2019 was $748 million, a decrease of $1,698 million, or 69%,
compared to 2018. This decrease was mainly due to the working
capital adjustment with Allergan and the Rimsa settlement in 2018,
and lower profit in our North America segment during 2019.
Free cash flow (Cash flow generated from operating
activities in 2019, net of cash used for capital investments and
beneficial interest collected in exchange for securitized trade
receivables) was $2,053 million in 2019, compared to $3,679 million
in 2018. The decrease in 2019 resulted mainly from the lower cash
flow generated from operating activities.
As of December 31, 2019, our debt was $26,908
million, compared to $28,916 million as of December 31, 2018. The
decrease was mainly due to senior notes repaid at maturity or
prepaid with cash generated during the year. The portion of total
debt classified as short-term as of December 31, 2019 was 9%,
compared to 8% as of December 31, 2018, due to a decrease in our
total debt. Our average debt maturity was approximately 6.4 years
as of December 31, 2019, compared to 6.8 years as of December 31,
2018.
Annual Report on Form
10-K
Teva will file its Annual Report on Form 10-K with the SEC in
the coming days. The report will include a complete analysis of the
financial results for 2019 and will be available on Teva’s
website, http://ir.tevapharm.com, as well as on the SEC’s
website: http://www.sec.gov.
Fourth Quarter 2019 Consolidated
Results
Revenues in the fourth quarter of 2019 were $4,468
million, an increase of 1%, or 2% in local currency terms, compared
to the fourth quarter of 2018, mainly due to an increase in sales
of AUSTEDO, AJOVY and certain respiratory products, partially
offset by lower revenues from COPAXONE in North America.
Exchange rate differences between the fourth quarter
of 2019 and the fourth quarter of 2018 negatively impacted our
revenues and GAAP operating income by $47 million and $27 million,
respectively. Our non-GAAP operating income was negatively impacted
by $29 million.
GAAP gross profit was $1,958 million in the
fourth quarter of 2019, a decrease of 1% compared to the fourth
quarter of 2018. GAAP gross profit margin was
43.8% in the fourth quarter of 2019, compared to 44.6% in the
fourth quarter of 2018. Non-GAAP gross profit was
$2,262 million in the fourth quarter of 2019, a decrease of 3%
compared to the fourth quarter of 2018. Non-GAAP gross
profit margin was 50.6% in the fourth quarter of 2019,
compared to 52.7% in the fourth quarter of 2018. The decrease in
non-GAAP gross profit margin in the fourth quarter of 2019 resulted
primarily from a decline in revenues from COPAXONE.
GAAP Research and Development
(R&D) expenses in the fourth quarter of
2019 were $232 million, a decrease of 21% compared to the fourth
quarter of 2018. Non-GAAP R&D expenses were
$237 million, or 5.3% of quarterly revenues, in the fourth quarter
of 2019, compared to $289 million, or 6.5% of quarterly revenues,
in the fourth quarter of 2018. The decrease in R&D expenses in
the fourth quarter of 2019 resulted primarily from pipeline
optimization and efficiencies realized as part of our restructuring
plan.
GAAP Selling and Marketing
(S&M) expenses in the fourth quarter of
2019 were $706 million, a decrease of 11% compared to the fourth
quarter of 2018. Non-GAAP S&M expenses were
$665 million, or 14.9% of quarterly revenues in the fourth quarter
of 2019, compared to $768 million, or 17.4% of quarterly revenues
in the fourth quarter of 2018. The decrease in S&M expenses in
2019 was mainly due to cost reduction and efficiency measures as
part of the restructuring plan.
GAAP General and Administrative (G&A)
expenses in the fourth quarter of 2019 were $318 million,
a decrease of 7% compared to the fourth quarter of 2018.
Non-GAAP G&A expenses were $309 million in the
fourth quarter of 2019, or 6.9% of quarterly revenues in the fourth
quarter of 2019, compared to $330 million, or 7.5% of quarterly
revenues in the fourth quarter of 2018. The decrease was mainly due
to cost reduction and efficiency measures as part of the
restructuring plan.
GAAP other income in the fourth quarter of 2019
was $47 million, compared to other loss of $43 million in the
fourth quarter of 2018. Non-GAAP other income in
the fourth quarter of 2019 was $9 million, compared to $5 million
in fourth quarter of 2018.
GAAP operating income in the fourth quarter of
2019 was $148 million, compared to a loss of $3,164 million in the
fourth quarter of 2018. Non-GAAP operating
income in the fourth quarter of 2019 was $1,061 million,
an increase of 12% compared to the fourth quarter of 2018.
Non-GAAP operating margin was 23.8% in the fourth
quarter of 2019 compared to 21.4% in the fourth quarter of
2018.
EBITDA (non-GAAP operating income, which excludes
amortization and certain other items, as well as depreciation
expenses) was $1,204 million in the fourth quarter of 2019, an
increase of 10% compared to $1,091 million in the fourth quarter of
2018.
GAAP financial expenses for the fourth quarter
of 2019 were $186, compared to $223 million in the fourth quarter
of 2018. Non-GAAP financial expenses were $198
million in the fourth quarter of 2019, compared to $216 million in
the fourth quarter of 2018.
In the fourth quarter of 2019, we recognized a GAAP tax
benefit of $119 million on a pre-tax GAAP loss of $38
million. In the fourth quarter of 2018, we recognized a GAAP tax
benefit of $139 million on a pre-tax GAAP loss of $3,387 million.
Non-GAAP income taxes for the fourth quarter of
2019 were $155 million, or 18%, on pre-tax non-GAAP income of $863
million. Non-GAAP income taxes in the fourth quarter of 2018 were
$96 million, or 13%, on pre-tax non-GAAP income of $730
million.
GAAP net income attributable to ordinary
shareholders and GAAP diluted earnings per
share in the fourth quarter of 2019 were $110 million and
$0.10, respectively, compared to GAAP net
loss attributable to ordinary shareholders and
GAAP diluted loss per share of $2,940 million and
$2.85, respectively, in the fourth quarter of 2018.
Non-GAAP net income attributable to ordinary
shareholders and non-GAAP diluted EPS in the
fourth quarter of 2019 were $683 million and $0.62, respectively,
compared to $543 million and $0.53, respectively, in the fourth
quarter of 2018.
For the fourth quarter of 2019, the weighted
average outstanding shares for the fully
diluted EPS calculation on a GAAP basis was 1,094 million shares,
compared to 1,031 million shares in the fourth quarter of 2018.
The weighted average outstanding
shares for the fully diluted EPS calculation on a non-GAAP
basis was 1,094 million shares in the fourth quarter of 2019,
compared to 1,034 million shares in the fourth quarter of 2018.
Non-GAAP information: Net non-GAAP adjustments in the
fourth quarter of 2019 were $573 million. Non-GAAP net income and
non-GAAP EPS for the fourth quarter were adjusted to exclude the
following items:
- An impairment of intangible and fixed assets of $477 million
mainly related to the acquisition of Actavis Generics;
- Amortization of purchased intangible assets totaling $290
million, of which $256 million is included in cost of goods sold
and the remaining $34 million in selling and marketing
expenses;
- Restructuring expenses of $59 million;
- Contingent consideration of $55 million;
- Equity compensation expenses of $19 million;
- Other non-GAAP items of $1 million;
- Minority interest adjustment of $54 million; and
- Related tax effect of $274 million.
Teva believes that excluding such items facilitates investors'
understanding of its business. See the attached tables for a
reconciliation of the GAAP results to the adjusted non-GAAP
figures. 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 operations during the
fourth quarter of 2019 was $538 million, compared to $367 million
in the fourth quarter of 2018. The increase was mainly due to
active management of inventory levels.
Free cash flow (Cash flow generated from operating
activities, net of cash used for capital investments and beneficial
interest collected in exchange for securitized trade receivables)
was $974 million in the fourth quarter of 2019, compared to $522
million in the fourth quarter of 2018. The increase in 2019
resulted mainly from the higher cash flow generated from operating
activities and sell of real-estate assets.
Segment Results for the Fourth Quarter
of 2019
North America Segment
Our North America segment includes the United States and
Canada.
The following table presents revenues, expenses and profit for
our North America segment for the three months ended December 31,
2019 and 2018:
Three months ended December
31,
2019
2018
(U.S. $ in millions / % of
Segment Revenues)
Revenues
$
2,373
100%
$
2,238
100.0%
Gross
profit
1,196
50.4%
1,201
53.7%
R&D
expenses
155
6.5%
185
8.3%
S&M
expenses
265
11.2%
341
15.2%
G&A
expenses
97
4.1%
127
5.7%
Other (income)
expense
(7
)
§
(3
)
§
Segment profit*
$
686
28.9%
$
551
24.6%
* Segment profit does not include
amortization and certain other items.
§ Represents an amount less than 0.5%.
Revenues from our North America segment in the
fourth quarter of 2019 were $2,373 million, an increase of $135
million, or 6%, compared to the fourth quarter of 2018, mainly due
to the launch of TRUXIMA (a biosimilar to
Rituxan®), higher revenues from respiratory products,
AUSTEDO and Anda, partially offset by lower revenues from
COPAXONE.
Revenues in the United States, our largest market, were
$2,218 million in the fourth quarter of 2019, an increase of $116
million, or 6%, compared to the fourth quarter of 2018.
Revenues by Major Products and Activities
The following table presents revenues for our North America
segment by major products and activities for the three months ended
December 31, 2019 and 2018:
North America
Three months ended
December 31,
Percentage
Change
2019
2018
2019-2018
(U.S. $ in millions)
Generic products
$
1,137
$
1,099
3%
COPAXONE
264
356
(26%)
BENDEKA/TREANDA
125
140
(11%)
ProAir*
80
45
77%
QVAR
67
9
604%
AJOVY
25
3
NA
AUSTEDO
136
68
98%
Anda
412
363
13%
Other
128
153
(16%)
Total
$
2,373
$
2,238
6%
_________
* Does not include revenues from the
ProAir authorized generic, which are included under generic
products.
Generic products revenues in our North America
segment in the fourth quarter of 2019 increased by 3% to $1,137
million, compared to the fourth quarter of 2018, mainly due to new
generic product launches, including the launch of TRUXIMA in
November 2019, partially offset by price and volume erosion due to
additional competition to our product portfolio.
In the fourth quarter of 2019, we led the U.S. generics market
in total prescriptions and new prescriptions, with approximately
388 million total prescriptions (based on trailing twelve months),
representing 10.5% of total U.S. generic prescriptions according to
IQVIA data.
COPAXONE revenues in our North America segment in
the fourth quarter of 2019 decreased by 26% to $264 million,
compared to the fourth quarter of 2018, mainly due to generic
competition in the United States.
BENDEKA and TREANDA combined
revenues in our North America segment in the fourth quarter of 2019
decreased by 11% to $125 million, compared to the fourth quarter of
2018, mainly due to lower volumes resulting from Eagle
Pharmaceuticals, Inc.’s launch of a ready-to-dilute bendamustine
hydrochloride in June 2018.
ProAir revenues in our North America segment in the
fourth quarter of 2019 increased by 77% to $80 million, compared to
the fourth quarter of 2018, mainly due to higher sales reserves
recorded in the fourth quarter of 2018 in anticipation of generic
competition to the short-acting beta-agonist class of drugs. We
launched our own ProAir authorized generic in the United States in
January 2019.
QVAR revenues in our North America segment in the
fourth quarter of 2019 increased to $67 million, compared to the
fourth quarter of 2018. The increase in sales was mainly due to a
higher net price and an increase in volume.
AJOVY revenues in our North America segment in the
fourth quarter of 2019 were $25 million. AJOVY’s exit market share
in the United Stated in terms of total number of prescriptions
during 2019 was 17%. On January 28, 2020, the FDA approved an
auto-injector device for AJOVY in the U.S.
AUSTEDO revenues in our North America segment in the
fourth quarter of 2019 were $136 million, compared to $68 million
in the fourth quarter of 2018. This increase was mainly due to
higher volumes.
Anda revenues in our North America segment in the
fourth quarter of 2019 increased by 13% to $412 million, compared
to the fourth quarter of 2018, mainly due to higher volumes.
North America Gross Profit
Gross profit from our North America segment in the fourth
quarter of 2019 was $1,196 million, flat compared to the fourth
quarter of 2018. Gross profit in the fourth quarter of 2019 was
mainly impacted by lower revenues from COPAXONE, offset by higher
revenues from AUSTEDO, the launch of TRUXIMA and higher revenues
from other specialty products.
Gross profit margin for our North America segment in the fourth
quarter of 2019 decreased to 50.4%, compared to 53.7% in the fourth
quarter of 2018. This decrease was mainly due to lower COPAXONE
revenues.
North America Profit
Profit from our North America segment in the fourth quarter of
2019 was $686 million, an increase of 24% compared to $551 million
in the fourth quarter of 2018. Profit increased mainly due to
higher revenues from AUSTEDO, the launch of TRUXIMA, higher
revenues from other specialty products and cost reductions and
efficiency measures, partially offset by lower revenues from
COPAXONE.
Europe Segment
Our Europe segment includes the European Union and certain other
European countries.
The following table presents revenues, expenses and profit for
our Europe segment for the three months ended December 31, 2019 and
2018:
Three months ended December
31,
2019
2018
(U.S. $ in millions / % of
Segment Revenues)
Revenues
$
1,184
100%
$
1,204
100%
Gross
profit
638
53.9%
689
57.2%
R&D
expenses
63
5.3%
75
6.2%
S&M
expenses
253
21.3%
278
23.1%
G&A
expenses
65
5.5%
82
6.8%
Other (income)
expense
-
§
1
§
Segment profit*
$
258
21.8%
$
253
21.0%
___________
* Segment profit does not include
amortization and certain other items.
§ Represents an amount less than
0.5%.
Revenues from our Europe segment in the fourth quarter of 2019
were $1,184 million, a decrease of $20 million, or 2%, compared to
the fourth quarter of 2018. In local currency terms, revenues
increased by 2%, mainly due to new generic product launches
partially offset by a decline in COPAXONE revenues due to the entry
of competing glatiramer acetate products and the loss of
exclusivity for certain products in our oncology portfolio.
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 December
31, 2019 and 2018:
Europe
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S. $ in millions)
Generic products
$
871
$
844
3%
COPAXONE
106
118
(10%)
Respiratory
products
86
90
(4%)
Other
122
152
(20%)
Total
$
1,184
$
1,204
(2%)
Generic products revenues in our Europe segment in
the fourth quarter of 2019, including OTC products, increased by 3%
to $871 million, compared to the fourth quarter of 2018. In local
currency terms, revenues increased by 7%, mainly due to new generic
product launches.
COPAXONE revenues in our Europe segment in the
fourth quarter of 2019 decreased by 10% to $106 million, compared
to the fourth quarter of 2018. In local currency terms, revenues
decreased by 8%, mainly due to price reductions resulting from the
entry of competing glatiramer acetate products.
Respiratory products revenues in our
Europe segment in the fourth quarter of 2019 decreased by 4% to $86
million, compared to the fourth quarter of 2018. In local currency
terms, revenues decreased by 2%, mainly due to lower sales in the
United Kingdom.
Europe Gross Profit
Gross profit from our Europe segment in the fourth quarter of
2019 was $638 million, a decrease of 7% compared to $689 million in
the fourth quarter of 2018. The decrease was mainly due to lower
revenues from COPAXONE, the impact of currency fluctuations and
higher cost of goods sold, partially offset by new generic product
launches.
Gross profit margin for our Europe segment in the fourth quarter
of 2019 decreased to 53.9%, compared to 57.2% in the fourth quarter
of 2018. This decrease was mainly due to higher cost of goods sold
and product mix.
Europe Profit
Profit from our Europe segment in the fourth quarter of 2019 was
$258 million, an increase of 2% compared to $253 million in the
fourth quarter of 2018. This increase was mainly due to cost
reductions and efficiency measures as part of the restructuring
plan.
International Markets Segment
Our International Markets segment includes all countries other
than those in our North America and Europe segments. The key
markets in this segment are Japan, Russia and Israel.
The following table presents revenues, expenses and profit for
our International Markets segment for the three months ended
December 31, 2019 and 2018:
Three months ended December
31,
2019
2018
(U.S. $ in millions / % of
Segment Revenues)
Revenues
$
578
100%
$
599
100%
Gross
profit
290
50.1%
312
52.1%
R&D
expenses
21
3.7%
26
4.3%
S&M
expenses
133
23.0%
134
22.4%
G&A
expenses
36
6.2%
38
6.3%
Other (income)
expense
(1)
§
-
§
Segment profit*
$
101
17.5%
$
114
19.0%
__________
* Segment profit does not include
amortization and certain other items.
§ Represents an amount less than
0.5%.
The data presented for prior
periods have been revised to reflect a revision in the presentation
of net revenues and cost of sales in the consolidated financial
statements. See "Revision of Previously Reported Consolidated
Financial Statements" above.
Revenues from our International Markets segment in
the fourth quarter of 2019 were $578 million, a decrease of $21
million, or 3%, compared to the fourth quarter of 2018. In local
currency terms, revenues decreased by 3% compared to the fourth
quarter of 2018, mainly due to lower sales in Japan and Israel.
Revenues by Major Products and Activities
The following table presents revenues for our International
Markets segment by major products and activities for the three
months ended December 31, 2019 and 2018:
International markets
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S. $ in millions)
Generic products
$
489
$
499
(2%)
COPAXONE
17
20
(14%)
Distribution*
6
5
11%
Other
67
76
(12%)
Total
$
578
$
599
(3%)
*The data presented for prior periods have
been revised to reflect a revision in the presentation of net
revenues and cost of sales in the consolidated financial
statements. See "Revision of Previously Reported Consolidated
Financial Statements" above.
Generic products revenues in our International
Markets segment, which include OTC products, decreased by 2% to
$489 million in the fourth quarter of 2019, compared to the fourth
quarter of 2018. In local currency terms, revenues decreased by 3%,
mainly due to lower sales in Japan resulting from regulatory
pricing reductions and generic competition to off-patented
products.
COPAXONE revenues in our International Markets
segment in the fourth quarter of 2019 decreased by 14% to $17
million, compared to the fourth quarter of 2018. In local currency
terms, revenues decreased by 8%.
Distribution revenues in our International Markets
segment in the fourth quarter of 2019 increased by 11% to $6
million, compared to the fourth quarter of 2018. In local currency
terms, revenues increased by 3%.
International Markets Gross Profit
Gross profit from our International Markets segment in the
fourth quarter of 2019 was $290 million, a decrease of 7% compared
to $312 million in the fourth quarter of 2018. Gross profit margin
for our International Markets segment in the fourth quarter of 2019
decreased to 50.1%, compared to 52.1% in the fourth quarter of
2018. The decrease was mainly due to lower gross profit resulting
from changes in the product mix in certain countries, mainly
Japan.
International Markets Profit
Profit from our International Markets segment in the fourth
quarter of 2019 was $101 million, compared to $114 million in the
fourth quarter of 2018. The decrease was mainly due to lower
revenues in Japan, partially offset by cost reductions and
efficiency measures as part of the restructuring plan.
Other Activities
We have other sources of revenues, primarily the sale of APIs to
third parties, certain contract manufacturing services and an
out-licensing platform offering a portfolio of products to other
pharmaceutical companies through our affiliate Medis. Our other
activities are not included in our North America, Europe or
International Markets segments.
Our revenues from other activities in the fourth quarter of 2019
decreased by 12% to $332 million, compared to the fourth quarter of
2018. In local currency terms, revenues decreased by 11%.
API sales to third parties in the fourth quarter of 2019 were
$187 million, a decrease of 10% compared to the fourth quarter of
2018, in both U.S. dollars and local currency terms.
Outlook for 2020
Non-GAAP Results
2019
Actuals
2020
Outlook
Revenues
$16.9 billion
$16.6 - $17.0 billion
Non-GAAP Operating Income
$4.1 billion
$4.0 - $4.4 billion
EBITDA
$4.7 billion
$4.5 - $4.9 billion
Non-GAAP EPS
$2.40
$2.30 - $2.55
Weighted average number of shares
1,094 million
1,098 million
Free cash flow
$2.1 billion
$1.8 - $2.2 billion
The outlook for 2020 non-GAAP results is based on the following
key assumptions:
2019
Actuals
Commentary
Global COPAXONE
$1.5 billion
Continued generic erosion; sales
of approximately $1.2 billion
AUSTEDO
$412 million
Continued increase in the U.S.
sales to approximately $650 million
Global AJOVY
$96 million
Continued increase in sales to
approximately $250 million
Foreign Exchange
Moderate negative impact on
revenues and operating income compared to 2019
Tax Rate
18%
17% - 18%
CAPEX
$0.5 billion
$0.6 billion
Conference Call
Teva will host a conference call and live webcast along with a
slide presentation on Wednesday, February 12, 2020 at 8:00 a.m. ET
to discuss its fourth quarter and annual 2019 results and overall
business environment. A question & answer session will
follow.
United States
1-866-966-1396
International
+44 (0) 2071 928000
Israel
1-809-203-624
For a list of other international toll-free numbers,
click here.
Passcode: 1459117
A live webcast of the call will also be available on Teva's
website at: ir.tevapharm.com. Please log in at least 10
minutes prior to the conference call in order to download the
applicable software.
Following the conclusion of the call, a replay of the webcast
will be available within 24 hours on the Company's website by
calling United States 1-866-331-1332; International +44 (0) 3333
009785; passcode: 1459117.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) has
been developing and producing medicines to improve people’s lives
for more than a century. We are a global leader in generic and
specialty medicines with a portfolio consisting of over 3,500
products in nearly every therapeutic area. Around 200 million
people around the world take a Teva medicine every day, and are
served by one of the largest and most complex supply chains in the
pharmaceutical industry. Along with our established presence in
generics, we have significant innovative research and operations
supporting our growing portfolio of specialty and biopharmaceutical
products. Learn more at www.tevapharm.com.
Non-GAAP Financial Measures
This press release contains certain financial information that
differs from what is reported under accounting principles generally
accepted in the United States ("GAAP"). These non-GAAP financial
measures, including, but not limited to, revenues prior to
revision, non-GAAP EPS, non-GAAP operating income, non-GAAP gross
profit, non-GAAP gross profit margin, EBITDA, non-GAAP financial
expenses, non-GAAP income taxes, non-GAAP net income and non-GAAP
diluted EPS are presented in order to facilitates investors'
understanding of our business. We utilize certain non-GAAP
financial measures to evaluate performance, in conjunction with
other performance metrics. The following are examples of how we
utilize the non-GAAP measures: our management and board of
directors use the non-GAAP measures to evaluate our operational
performance, to compare against work plans and budgets, and
ultimately to evaluate the performance of management; our annual
budgets are prepared on a non-GAAP basis; and senior management’s
annual compensation is derived, in part, using these non-GAAP
measures. Revenues prior to revision are being presented to provide
investors with comparable information to that which was provided in
prior periods. The revision of gross to net presentation of
revenues in the distribution business in our International Markets
segment decreased revenues with an offsetting decrease in cost of
sales. See the attached tables for a reconciliation of the GAAP
results to the adjusted non-GAAP figures. Investors should consider
non-GAAP financial measures in addition to, and not as replacements
for, or superior to, measures of financial performance prepared in
accordance with GAAP. We are not providing forward looking guidance
for GAAP reported financial measures or a quantitative
reconciliation of forward-looking non-GAAP financial measures to
the most directly comparable GAAP measure because we are unable to
predict with reasonable certainty the ultimate outcome of certain
significant items without unreasonable effort.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which are based on management’s current beliefs and
expectations and are subject to substantial risks and
uncertainties, both known and unknown, that could cause our future
results, performance or achievements to differ significantly from
that expressed or implied by such forward-looking statements.
Important factors that could cause or contribute to such
differences include risks relating to:
- our ability to successfully compete in the marketplace,
including: that we are substantially dependent on our generic
products; consolidation of our customer base and commercial
alliances among our customers; the increase in the number of
competitors targeting generic opportunities and seeking U.S. market
exclusivity for generic versions of significant products;
competition for our specialty products, especially COPAXONE®, our
leading medicine, which faces competition from existing and
potential additional generic versions, competing glatiramer acetate
products and orally-administered alternatives; the uncertainty of
commercial success of AJOVY® or AUSTEDO®; competition from
companies with greater resources and capabilities; delays in
launches of new products and our ability to achieve expected
results from investments in our product pipeline; ability to
develop and commercialize biopharmaceutical products; efforts of
pharmaceutical companies to limit the use of generics, including
through legislation and regulations and the effectiveness of our
patents and other measures to protect our intellectual property
rights;
- our substantial indebtedness, which may limit our ability to
incur additional indebtedness, engage in additional transactions or
make new investments, may result in a further downgrade of our
credit ratings; and our inability to raise debt or borrow funds in
amounts or on terms that are favorable to us;
- our business and operations in general, including:
implementation of our restructuring plan announced in December
2017; our ability to attract, hire and retain highly skilled
personnel; our ability to develop and commercialize additional
pharmaceutical products; compliance with anti-corruption, sanctions
and trade control laws; manufacturing or quality control problems;
interruptions in our supply chain; disruptions of information
technology systems; breaches of our data security; variations in
intellectual property laws; challenges associated with conducting
business globally, including adverse effects of political or
economic instability, major hostilities or terrorism; significant
sales to a limited number of customers; our ability to successfully
bid for suitable acquisition targets or licensing opportunities, or
to consummate and integrate acquisitions; our prospects and
opportunities for growth if we sell assets and potential
difficulties related to the operation of our new global enterprise
resource planning (ERP) system;
- compliance, regulatory and litigation matters, including:
increased legal and regulatory action in connection with public
concern over the abuse of opioid medications in the U.S. and our
ability to reach a final resolution of the remaining opioid-related
litigation; costs and delays resulting from the extensive
governmental regulation to which we are subject; the effects of
reforms in healthcare regulation and reductions in pharmaceutical
pricing, reimbursement and coverage; governmental investigations
into S&M practices; potential liability for patent
infringement; product liability claims; increased government
scrutiny of our patent settlement agreements; failure to comply
with complex Medicare and Medicaid reporting and payment
obligations; and environmental risks;
- other financial and economic risks, including: our exposure to
currency fluctuations and restrictions as well as credit risks;
potential impairments of our intangible assets; potential
significant increases in tax liabilities; and the effect on our
overall effective tax rate of the termination or expiration of
governmental programs or tax benefits, or of a change in our
business;
and other factors discussed in our Annual Report on Form 10-K
and subsequently filed reports, including the sections captioned
"Risk Factors." Forward-looking statements speak only as of the
date on which they are made, and we assume no obligation to update
or revise any forward-looking statements or other information
contained herein, whether as a result of new information, future
events or otherwise. You are cautioned not to put undue reliance on
these forward-looking statements.
Consolidated Statements of
Income (U.S. dollars in millions,
except share and per share data) Three months
ended Year ended December 31, December 31,
2019
2018
2019
2018
(Unaudited) (Unaudited) (Audited)
(Audited) Net revenues
4,468
4,418
16,887
18,271
Cost of sales
2,510
2,447
9,351
9,975
Gross profit
1,958
1,971
7,537
8,296
Research and development expenses
232
295
1,010
1,213
Selling and marketing expenses
706
797
2,614
2,916
General and administrative expenses
318
344
1,192
1,298
Other asset impairments, restructuring and other items
161
153
423
987
Intangible assets impairment
433
745
1,639
1,991
Goodwill impairment
-
2,727
-
3,027
Legal settlements and loss contingencies
7
31
1,178
(1,208)
Other expense (income)
(47)
43
(76)
(291)
Operating income (loss)
148
(3,164)
(443)
(1,637)
Financial expenses – net
186
223
822
959
Loss before income taxes
(38)
(3,387)
(1,265)
(2,596)
Tax benefits
(119)
(139)
(278)
(195)
Share in losses (profit) of associated companies, net
5
(5)
13
71
Net income (loss)
75
(3,243)
(1,000)
(2,472)
Net income attributable to non-controlling interests
(34)
(357)
(2)
(322)
Net income (loss) attributable to Teva
110
(2,886)
(999)
(2,150)
Dividends on preferred shares
-
54
-
249
Net loss attributable to Teva's ordinary shareholders
110
(2,940)
(999)
(2,399)
Earnings per share attributable to ordinary
shareholders: Basic ($)
0.10
(2.85)
(0.91)
(2.35)
Diluted ($)
0.10
(2.85)
(0.91)
(2.35)
Weighted average number of shares (in millions):
Basic
1,092
1,031
1,091
1,021
Diluted
1,094
1,031
1,091
1,021
Non-GAAP net income attributable to ordinary
shareholders:*
683
543
2,627
2,985
Non-GAAP net income attributable to ordinary shareholders for
diluted earnings per share:
683
543
2,627
2,985
Non-GAAP earnings per share attributable to ordinary
shareholders:* Basic ($)
0.63
0.53
2.41
2.92
Diluted ($)
0.62
0.53
2.40
2.92
Non-GAAP average number of shares (in millions):
Basic
1,092
1,031
1,091
1,021
Diluted
1,094
1,034
1,094
1,024
* See reconciliation attached.
Condensed Consolidated Balance Sheets
(U.S. dollars in millions)
(Audited) December
31, December 31,
2019
2018
ASSETS Current assets:
Cash and cash equivalents
1,975
1,782
Trade receivables
5,676
5,822
Inventories
4,422
4,731
Prepaid expenses
870
899
Other current assets
434
468
Assets held for sale
87
92
Total current assets
13,464
13,794
Deferred income taxes
386
368
Other non-current assets
591
731
Property, plant and equipment, net
6,436
6,868
Operating lease right-of-use assets
514
-
Identifiable intangible assets, net
11,232
14,005
Goodwill
24,846
24,917
Total assets
57,470
60,683
LIABILITIES & EQUITY Current
liabilities: Short-term debt
2,345
2,216
Sales reserves and allowances
6,159
6,711
Trade payables
1,718
1,853
Employee-related obligations
693
870
Accrued expenses
1,869
1,868
Other current liabilities
889
804
Total current liabilities
13,674
14,322
Long-term liabilities: Deferred income taxes
1,096
2,140
Other taxes and long-term liabilities
2,640
1,727
Senior notes and loans
24,562
26,700
Operating lease liabilities
435
-
Total long-term liabilities
28,733
30,567
Equity: Teva shareholders’ equity
13,972
14,707
Non-controlling interests
1,091
1,087
Total equity
15,063
15,794
Total liabilities and equity
57,470
60,683
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in
millions) (Unaudited) Year ended
Three months ended
December 31, December 31,
2019
2018
2019
2018
Operating activities: Net income (loss)
(1,000
)
$
(2,472
)
$
76
$
(3,243
)
Adjustments to reconcile net income (loss) to net cash provided by
operations: Impairment of long-lived assets
1,778
5,621
476
3,717
Depreciation and amortization
1,722
1,842
416
382
Net change in operating assets and liabilities
(896
)
(1,823
)
(112
)
(302
)
Deferred income taxes — net and uncertain tax positions
(985
)
(837
)
(333
)
(187
)
Stock-based compensation
119
155
20
33
Other items
28
(135
)
23
(127
)
Research and development in process
-
114
-
60
Net income (loss) from sale of long-lived assets and investments
(18
)
(19
)
(28
)
34
Net cash provided by operating activities
748
2,446
538
367
Investing activities: Beneficial interest
collected in exchange for securitized trade receivables
1,487
1,735
379
363
Proceeds from sales of long-lived assets and investments
343
890
174
10
Purchases of property, plant and equipment
(525
)
(651
)
(119
)
(213
)
Purchases of investments and other assets
(8
)
(119
)
(3
)
(63
)
Other investing activities
58
11
(1
)
(23
)
Net cash provided by investing activities
1,355
1,866
430
74
Financing activities: Repayment of senior notes and
loans and other long-term liabilities
(3,944
)
(7,446
)
(2,229
)
(457
)
Proceeds from senior notes and loans, net of issuance costs
2,083
4,434
2,083
-
Net change in short-term debt
(2
)
(260
)
(98
)
2
Other financing activities
(11
)
(57
)
3
(44
)
Tax withholding payments made on shares and dividends
(52
)
(22
)
-
-
Net cash provided by (used in) financing activities
(1,926
)
(3,351
)
(241
)
(499
)
Translation adjustment on cash and cash equivalents
16
(142
)
7
(35
)
Net change in cash and cash equivalents
193
819
734
(93
)
Balance of cash and cash equivalents at beginning of period
1,782
963
1,241
1,875
Balance of cash and cash equivalents at end of period
$
1,975
$
1,782
$
1,975
$
1,782
Three Months Ended December 31, 2019 U.S. $ and
shares in millions (except per share amounts) GAAP Excluded for
non GAAP measurement Non GAAP Amortization
ofpurchasedintangible assets Legalsettlements
andlosscontingencies Impairmentof long-livedassets
Other R&Dexpenses Restructuringcosts Costs
related toregulatory actionstaken in facilities
Equitycompensation Contingentconsideration Gain on
saleof business OthernonGAAPitems Otheritems
COGS
2,510
256
17
5
26
2,206
R&D
232
(8)
4
-
237
S&M
706
34
6
1
665
G&A
318
5
5
309
Other income
(47)
(38)
(9)
Legal settlements and loss contingencies
7
7
-
Other asset impairments, restructuring and other items
161
44
59
55
2
-
Intangible assets impairment
433
433
-
Financial expenses
186
(11)
198
Corresponding tax effect
(119)
(274)
155
Share in losses of associated companies – net
5
-
5
Net income attributable to non-controlling interests
(34)
(54)
19
Total reconciled items
290
7
477
(8)
59
17
19
55
(38)
34
(339)
EPS - Basic
0.10
0.52
0.63
EPS - Diluted
0.10
0.52
0.62
The non-GAAP diluted weighted
average number of shares was 1,094 million for the three months
ended December 31, 2019.
Three Months Ended December 31, 2018 U.S. $ and
shares in millions (except per share amounts) GAAP Excluded for
non GAAP measurement Non GAAP Amortization
ofpurchasedintangibleassets Legalsettlements
andlosscontingencies Goodwillimpairment Impairmentof
long-livedassets Other R&Dexpenses
Acquisition,integrationand relatedexpenses
Restructuringcosts Costs related toregulatory actionstaken
in facilities Equitycompensation
Contingentconsideration Gain on sale ofbusiness Other
non GAAPitems Otheritems COGS
2,447
233
8
6
110
2,090
R&D
295
1
5
-
289
S&M
797
24
8
(3)
768
G&A
344
11
3
330
Other income
43
48
(5)
Legal settlements and loss contingencies
31
31
-
Other asset impairments, restructuring and other items
153
245
4
46
(27)
(115)
-
Intangible assets impairment
745
745
-
Goodwill impairment
2,727
2,727
-
Financial expenses
223
7
216
Corresponding tax effect
(139)
(235)
96
Share in losses of associated companies – net
(5)
-
(5)
Net income attributable to non-controlling interests
(357)
(399)
42
Total reconciled items
257
31
2,727
990
1
4
46
8
30
(27)
48
(5)
(627)
EPS - Basic
(2.85)
3.38
0.53
EPS - Diluted
(2.85)
3.38
0.53
The non-GAAP diluted weighted
average number of shares was 1,034 million for the three months
ended December 31, 2018.
Year Ended December 31, 2019 (U.S. $ and shares in
millions, except per share amounts) GAAP Excluded for non GAAP
measurement Non GAAP Amortizationof
purchasedintangibleassets Legalsettlements andloss
contingencies Impairment oflong-livedassets Other
R&Dexpenses Restructuringcosts Costsrelated
toregulatoryactionstaken infacilities Equitycompensation
Contingentconsideration Gain onsale ofbusiness
OthernonGAAPitems Otheritems COGS*
9,351
973
45
26
121
8,185
R&D
1,010
(15)
20
1
1,004
S&M
2,614
139
35
1
2,438
G&A
1,192
42
5
1,145
Other income
(76)
(50)
(27)
Legal settlements and loss contingencies
1,178
1,178
-
Other asset impairments, restructuring and other items
423
139
199
59
26
-
Intangible assets impairment
1,639
1,639
-
Financial expenses
822
(3)
824
Corresponding tax effect
(278)
(875)
597
Share in losses of associated companies – net
13
-
13
Net income attributable to non-controlling interests
(2)
(82)
80
Total reconciled items
1,113
1,178
1,778
(15)
199
45
123
59
(50)
155
(959)
EPS - Basic
(0.91)
3.32
2.41
EPS - Diluted
(0.91)
3.32
2.40
The non-GAAP diluted weighted
average number of shares was 1,094 million for the year ended
December 31, 2019.
Year ended December 31, 2018 (U.S. $ and shares in
millions, except per share amounts) GAAP Excluded for non GAAP
measurement Non GAAP Amortization ofpurchasedintangible
assets Goodwillimpairment Legal settlementsand
losscontingencies Impairmentof long-livedassets Other
R&Dexpenses Acquisitionintegrationand relatedexpenses
Restructuringcosts Costs related toregulatoryactions
taken infacilities Equitycompensation
Contingentconsideration Gain on sale ofbusiness Other
nonGAAPitems Otheritems COGS*
9,975
1,004
14
28
204
8,725
R&D
1,213
83
26
2
1,102
S&M
2,916
162
43
(7)
2,718
G&A
1,298
55
15
1,228
Other income
(291)
(66)
(225)
Legal settlements and loss contingencies
(1,208)
(1,208)
-
Other asset impairments, restructuring and other items
987
500
13
488
57
(71)
-
Intangible assets impairment
1,991
1,991
-
Goodwill impairment
3,027
3,027
-
Financial expenses
959
66
893
Corresponding tax effect
(195)
(714)
519
Share in losses of associated companies – net
71
103
(32)
Net income attributable to non-controlling interests
(322)
(431)
109
Total reconciled items
1,166
3,027
(1,208)
2,491
83
13
488
14
152
57
(66)
143
(976)
EPS - Basic
(2.35)
5.27
2.92
EPS - Diluted
(2.35)
5.27
2.92
The non-GAAP diluted weighted
average number of shares was 1,024 million for the year ended
December 31, 2018.
The data presented for prior periods have
been revised to reflect a revision in the presentation of net
revenues and cost of sales in the consolidated financial
statements. See note 1b to our consolidated financial statements
for additional information.
Segment Information North
America Europe International Markets Three
months endedDecember 31, Three months endedDecember 31,
Three months endedDecember 31,
2019
2018
2019
2018
2019
2018
(U.S. $ in millions) (U.S. $ in millions)
(U.S. $ in millions) Revenues
$
2,373
$
2,238
$
1,184
$
1,204
$
578
$
599
Gross profit
1,196
1,201
638
689
290
312
R&D expenses
155
185
63
75
21
26
S&M expenses
265
341
253
278
133
134
G&A expenses
97
127
65
82
36
38
Other income (loss)
(7)
(3)
-
1
(1)
-
Segment profit
$
686
$
551
$
258
$
253
$
101
$
114
Segment Information North
America Europe International Markets Year
ended December 31, Year ended December 31, Year ended
December 31,
2019
2018
2019
2018
2019
2018
(U.S. $ in millions) (U.S. $ in millions)
(U.S. $ in millions) Revenues
$
8,542
$
9,297
$
4,795
$
5,186
$
2,246
$
2,422
Gross profit
4,350
4,979
2,704
2,884
1,167
1,254
R&D expenses
652
713
262
283
88
96
S&M expenses
1,021
1,154
890
1,003
481
518
G&A expenses
439
484
239
325
138
153
Other income
(14)
(209)
(5)
-
(3)
(11)
Segment profit
$
2,252
$
2,837
$
1,318
$
1,273
$
464
$
498
Reconciliation of our segment
profit
to consolidated income before
income taxes
Three months ended
December 31,
2019
2018
(U.S.$ in millions)
North America profit
$
686
$
551
Europe profit
258
253
International Markets profit
101
114
Total segment profit
1,044
918
Profit (loss) of other activities
17
28
1,061
946
Amounts not allocated to segments: Amortization
290
257
Other asset impairments, restructuring and other items
161
153
Goodwill impairment
-
2,727
Intangible asset impairments
433
745
Loss from divestitures, net of divestitures related costs
(38
)
48
Other R&D expenses (income)
(8
)
1
Costs related to regulatory actions taken in facilities
17
8
Legal settlements and loss contingencies
7
31
Other unallocated amounts
51
140
Consolidated operating income (loss)
148
(3,164
)
Financial expenses - net
186
223
Consolidated income (loss) before income taxes
$
(38
)
$
(3,387
)
Reconciliation of our segment
profit
to consolidated income before
income taxes
Year ended
December 31,
2019
2018
(U.S.$ in millions)
North America profit
$
2,252
$
2,837
Europe profit
1,318
1,273
International Markets profit
464
498
Total segment profit
4,034
4,608
Profit of other activities
108
115
4,142
4,723
Amounts not allocated to segments: Amortization
1,113
1,166
Other asset impairments, restructuring and other items
423
987
Goodwill impairment
-
3,027
Intangible asset impairments
1,639
1,991
Gain on divestitures, net of divestitures related costs
(50
)
(66
)
Other R&D expenses (income)
(15
)
83
Costs related to regulatory actions taken in facilities
45
14
Legal settlements and loss contingencies
1,178
(1,208
)
Other unallocated amounts
252
366
Consolidated operating income (loss)
(443
)
(1,637
)
Financial expenses - net
822
959
Consolidated income (loss) before income taxes
$
(1,265
)
$
(2,596
)
Revenues by Activity and Geographical Area
(Unaudited)
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
North America segment Generics medicines
$
1,137
$
1,099
3%
COPAXONE
264
356
(26%)
Bendeka and Trenda
125
140
(11%)
ProAir
80
45
77%
QVAR
67
9
604%
AJOVY
25
3
NA
AUSTEDO
136
68
98%
ANDA
412
363
13%
Other
128
153
(16%)
Total
2,373
2,238
6%
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
Europe segment Generic medicines
$
871
$
844
3%
COPAXONE
106
118
(10%)
Respiratory products
86
90
(4%)
Other
122
152
(20%)
Total
1,184
1,204
(2%)
Three months ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
International Markets segment Generics medicines
$
489
$
499
(2%)
COPAXONE
17
20
(14%)
Distribution
6
5
11%
Other
67
76
(12%)
Total
578
599
(3%)
Revenues by Activity and Geographical Area
(Unaudited)
Year ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
North America segment
Generics medicines
$
3,963
4,056
(2%)
COPAXONE
1,017
1,759
(42%)
Bendeka and Trenda
496
642
(23%)
ProAir
274
397
(31%)
QVAR
250
182
38%
AJOVY
93
3
N/A
AUSTEDO
412
204
102%
ANDA
1,492
1,347
11%
Other
546
708
(23%)
Total
8,542
9,297
(8%)
Year ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
Europe segment
Generic medicines
$
3,470
$
3,593
(3%)
COPAXONE
432
535
(19%)
Respiratory products
354
402
(12%)
Other
539
656
(18%)
Total
4,795
5,186
(8%)
Year ended
December 31,
Percentage
Change
2019
2018
2018-2019
(U.S.$ in millions)
International Markets segment
Generics medicines
$
1,893
$
2,022
(6%)
COPAXONE
63
72
(13%)
Distribution
20
19
6%
Other
271
309
(12%)
Total
2,246
2,422
(7%)
Revision
(Unaudited)
The following table summarizes the impact of the revision on net
revenues and non-GAAP cost of sales in the consolidated statements
of income in the relevant periods: Net revenues Cost of
sales As reported Adjustment As revised As reported Adjustment As
revised
2018
Q1
5,065
(149)
4,916
2,447
(149)
2,298
Q2
4,701
(150)
4,551
2,362
(150)
2,212
Q3
4,529
(143)
4,386
2,268
(143)
2,125
Q4
4,559
(141)
4,418
2,231
(141)
2,090
2019
Q1
4,295
(146)
4,149
2,145
(146)
1,999
Q2
4,337
(159)
4,178
2,149
(159)
1,990
Q3
4,264
(171)
4,093
2,162
(171)
1,991
Revision of prior period financial statements with respect to the
distribution business in our International Markets segment,
decreasing sales by $165 million in Q4 2019, and $642 million in
2019, with an offsetting decrease in cost of sales. No impact on
gross profit, operating income, earnings per share or cash flows
for the related periods.
Free cash flow
reconciliation (Unaudited)
Year ended December
31,
2019
2018
(U.S. $ in millions)
Net cash provided by operating activities
748
2,446
Beneficial interest collected in exchange for securitized trade
receivables, included in investing activities
1,487
1,735
capital expenditures
(525
)
(651
)
Proceeds from sale of property, plant and equipment, intangible
assets and companies
343
150
Free cash flow
$
2,053
$
3,679
Free cash flow reconciliation (Unaudited)
Three months ended
December 31,
2019
2018
(U.S. $ in millions)
Net cash provided by operating activities
538
367
Beneficial interest collected in exchange for securitized trade
receivables, included in investing activities
379
363
capital expenditures
(119
)
(213
)
Proceeds from sale of property, plant and equipment, intangible
assets and companies
176
6
Free cash flow
$
974
$
522
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200212005398/en/
IR Contacts United States Kevin C. Mannix (215)
591-8912
Israel Ran Meir 972 (3) 926-7516
PR Contacts United States Kelley Dougherty (973)
832-2810
Israel Yonatan Beker 972 (54) 888 5898
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