- Revenues of $4.0 billion
- GAAP diluted EPS of $0.07
- Non-GAAP diluted EPS of $0.63
- Cash flow used in operating activities of $405 million
- Free cash flow of $59 million
- Full year 2021 business outlook reaffirmed:
- Net revenues of $16.4-16.8 billion
- EBITDA of $4.8 - $5.1 billion
- EPS of $2.50 - $2.70
- Free cash flow of $2.0 - $2.3 billion
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today
reported results for the quarter ended March 31, 2021.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20210428005445/en/
Mr. Kåre Schultz, Teva's President and CEO, said, "As the
COVID-19 pandemic continues to impact the world and our industry,
our employees continue to work together to meet the needs of our
customers and patients, all while we remain focused on our
long-term goals and laying the foundation for future growth.
"We have improved our profitability and reduced our net debt to
$23.2 billion. We have also seen solid performance from our key
growth drivers: the biosimilar Truxima® increased its market share
to 26%, AUSTEDO® continued its year-over-year growth, and AJOVY®
solidified its market share in the U.S. and continues to expand in
Europe. Based on our results and expectations for the remainder of
the year, we are reaffirming our guidance."
First Quarter 2021 Consolidated Results
Revenues in the first quarter of 2021 were $3,982
million, a decrease of 9% or 10% in local currency terms, compared
to the first quarter of 2020. This decrease was mainly due to lower
revenues from generic, OTC and respiratory products and from
COPAXONE in our Europe segment, lower revenues from Anda, COPAXONE
and BENDEKA/TREANDA in our North America segment, lower revenues
from Japan resulting from the divestment of a majority of the
generic and operational assets of our Japanese business venture, as
well as regulatory price reductions and generic competition to
off-patented products in Japan, partially offset by higher revenues
from generic products and AUSTEDO in our North America segment.
Revenues were also affected by changes in demand for certain
products resulting from the impact of the COVID-19 pandemic.
Exchange rate movements during the first quarter of 2021,
net of hedging effects, positively impacted our revenues by $74
million and negatively impacted our GAAP and non-GAAP operating
income by $14 million and $10 million, respectively.
GAAP gross profit was $1,878 million in the first quarter
of 2021, a decrease of 9% compared to the first quarter of 2020.
GAAP gross profit margin was 47.2% in the first quarter of
2021, compared to 47.3% in the first quarter of 2020. The decrease
in gross profit margin was mainly due to lower revenues from our
Europe segment, partially offset by higher profitability in North
America resulting from the change in mix of products. Non-GAAP
gross profit was $2,144 million in the first quarter of
2021, a decrease of 7% compared to the first quarter of 2020.
Non-GAAP gross profit margin was 53.8% in the first quarter
of 2021, compared to 53.1% in the first quarter of 2020.
GAAP Research and Development (R&D) expenses
in the first quarter of 2021 were $254 million, an increase of 15%
compared to the first quarter of 2020. Non-GAAP R&D
expenses were $244 million, or 6.1% of quarterly revenues, in
the first quarter of 2021, compared to $221 million, or 5.1%, in
the first quarter of 2020. In the first quarter of 2021, our
R&D expenses related primarily to specialty product candidates
in the respiratory and pain therapeutic areas, with additional
activities in selected other areas and generic products including
biosimilars. Our higher R&D expenses in the first quarter of
2021, compared to the first quarter of 2020, were mainly due to an
increase in respiratory and biosimilar projects.
GAAP Selling and Marketing (S&M) expenses in
the first quarter of 2021 were $585 million, a decrease of 5%
compared to the first quarter of 2020. Non-GAAP S&M
expenses were $549 million, or 13.8% of quarterly revenues, in
the first quarter of 2021, compared to $570 million, or 13.1%, in
the first quarter of 2020.
GAAP General and Administrative (G&A) expenses in the
first quarter of 2021 were $290 million, a decrease of 5% compared
to the first quarter of 2020. Non-GAAP G&A expenses were
$278 million, or 7.0% of quarterly revenues, in the first quarter
of 2021, compared to $290 million, or 6.7%, in the first quarter of
2020.
GAAP operating income in the first quarter of 2021 was
$434 million, compared to $191 million in the first quarter of
2020. The increase was mainly due to lower intangible asset
impairment charges in the first quarter of 2021, partially offset
by lower profit in our Europe segment along with higher legal
settlements and loss contingencies.
Non-GAAP operating income in the first quarter of 2021
was $1,077 million, a decrease of 13%, compared to $1,244 million
in the first quarter of 2020. The decrease was mainly due to lower
profit in our Europe segment.
EBITDA (defined as operating income, excluding
depreciation and amortization expenses) was $809 million in the
first quarter of 2021, an increase of 37% compared to $590 million
in the first quarter of 2020. Adjusted EBITDA (defined as
operating income excluding depreciation and amortization expenses
and certain other items) was $1,206 million in the first quarter of
2021, a decrease of 12% compared to $1,375 million in the first
quarter of 2020.
GAAP financial expenses were $290 million in the first
quarter of 2021, compared to $224 million in the first quarter of
2020. Non-GAAP financial expenses were $227 million in the
first quarter of 2021, compared to $213 million in the first
quarter of 2020. Financial expenses in the first quarter of 2021,
were mainly comprise of interest expenses of $239 million and loss
on revaluation of marketable securities of $64 million. Financial
expense in the first quarter of 2020 were mainly comprised of
interest expenses of $241 million.
In the first quarter of 2021, we recognized a GAAP tax
expense of $62 million, on pre-tax income of $144 million. In
the first quarter of 2020, we recognized a tax benefit of $59
million, on pre-tax loss of $33 million. Our tax rate for the first
quarter of 2021 was mainly affected by legal settlements,
impairments and amortization in jurisdictions in which tax rates
are lower than Teva's average tax rate on its ongoing business
operations. Non-GAAP income taxes for the first quarter of
2021 were $146 million, or 17%, on pre-tax non-GAAP income of $851
million. Non-GAAP income taxes in the first quarter
of 2020 were $175 million, or 17%, on pre-tax non-GAAP income of
$1,030 million. Our non-GAAP tax rate for the first quarter of 2021
was mainly affected by the mix of products we sold and interest
expense disallowance.
We expect our annual non-GAAP tax rate for 2021 to be
17%-18%, unchanged from our outlook provided in February 2021.
GAAP net income attributable to Teva and GAAP EPS
were $77 million and $0.07 respectively, in the first quarter of
2021, compared to $69 million and $0.06 in the first quarter of
2020. This increase was mainly due to the increase in operating
income, as discussed above. Non-GAAP net income attributable
to Teva and non-GAAP diluted EPS in the first quarter of
2021 were $699 million and $0.63, respectively, compared to $835
million and $0.76 in the first quarter of 2020.
The weighted average diluted shares outstanding
used for the fully diluted share calculation on a GAAP and non-GAAP
basis for the three months ended March 31, 2021 and 2020 was 1,107
million and 1,096 million shares, respectively.
As of March 31, 2021 and 2020, the fully diluted share count for
purposes of calculating our market capitalization was approximately
1,130 million and 1,118 million, respectively.
Non-GAAP information: Net non-GAAP adjustments in the
first quarter of 2021 were $621 million. Non-GAAP net income and
non-GAAP EPS for the first quarter of 2021 were adjusted to exclude
the following items:
- Amortization of purchased intangible assets of $242 million, of
which $215 million is included in cost of sales and the remaining
$27 million in S&M expenses;
- Impairment of long-lived assets of $127 million, comprised
mainly of impairment of intangible assets of IPR&D and product
rights assets in connection with the Actavis Generics
acquisition;
- Legal settlements and loss contingencies of $104 million,
mainly related to a provision for a potential patent
setlement;
- Restructuring expenses of $81 million;
- Finance expense of $64 million, related to revaluation of
marketable securities;
- Equity compensation expenses of $31 million;
- Other items of $57 million; and
- Income tax of $85 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 used in operating activities during the first
quarter of 2021 was $405 million, compared to $305 million
generated in the first quarter of 2020. The decrease in the first
quarter of 2021 was mainly due to changes in working capital items
resulting from a decrease in sales reserves and allowances
(SR&A) and an increase in inventory, as well as lower profit in
our Europe segment.
Free cash flow (cash flow from operating activities, cash
used for capital investments, beneficial interest collected in
exchange for securitized accounts receivables and proceeds from
divestitures of businesses and other assets) was $59 million in the
first quarter of 2021, compared to $551 million in the first
quarter of 2020. The decrease in the first quarter of 2021 resulted
mainly from lower cash flow from operating activities, partially
offset by higher sales of assets.
As of March 31, 2021, our debt was $24,986 million,
compared to $25,919 million as of December 31, 2020. This decrease
was mainly due to redemption of $491 million of our convertible
senior debentures and exchange rate fluctuations. The portion of
total debt classified as short-term as of March 31, 2021 was 11%,
compared to 12% as of December 31, 2020. Our average debt maturity
was approximately 5.6 years as of March 31, 2021, compared to 5.8
years as of December 31, 2020. Our financial leverage was 69% as of
March 31, 2021, compared to 70% as of December 31, 2020.
Segment Results for the First Quarter of 2021
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 March 31, 2021
and 2020:
Three months ended March
31,
2021
2020
(U.S. $ in millions / % of
Segment Revenues)
Revenues
$
1,989
100%
$
2,082
100%
Gross profit
1,074
54.0%
1,062
51.0%
R&D expenses
160
8.0%
146
7.0%
S&M expenses
229
11.5%
251
12.1%
G&A expenses
111
5.6%
118
5.6%
Other income
(3)
§
(2)
§
Segment profit*
$
577
29.0%
$
550
26.4%
* 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 first
quarter of 2021 were $1,989 million, a decrease of $94 million, or
5%, compared to the first quarter of 2020, mainly due to a decrease
in revenues from Anda, COPAXONE and BENDEKA/TREANDA, partially
offset by higher revenues from generic products and AUSTEDO. Our
North America segment has experienced some reductions in volume due
to less physician and hospital activity during the COVID-19
pandemic, but has also experienced increase in demand for certain
products related to the treatment of COVID-19 and its symptoms. In
addition, the ability to promote certain specialty products,
primarily AJOVY and AUSTEDO, has been impacted by less physician
visits by patients and less physician interactions by our sales
personnel.
Revenues in the United States, our largest market, were
$1,854 million in the first quarter of 2021, a decrease of $87
million, or 4%, compared to the first quarter of 2020.
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
March 31, 2021 and 2020:
Three months ended
March 31,
Percentage
Change
2021
2020
2020-2021
(U.S. $ in millions)
Generic products
$
1,053
$
952
11%
AJOVY
31
29
8%
AUSTEDO
146
122
20%
BENDEKA/TREANDA
91
105
(14%)
COPAXONE
164
198
(17%)
ProAir*
54
59
(9%)
Anda
289
426
(32%)
Other
161
191
(16%)
Total
$
1,989
$
2,082
(5%)
* Does not include revenues from ProAir
authorized generic, which are included under generic products.
Generic products revenues in our North America segment
(including biosimilars) in the first quarter of 2021 were $1,053
million, an increase of 11% compared to the first quarter of 2020.
This increase was mainly due to higher revenues from emtricitabine
and tenofovir disoproxil fumarate tablets (the generic equivalent
of Truvada®), Truxima (the biosimilar to Rituxan®) and ProAir®
authorized generic, partially offset by lower volume and pricing of
other generic products.
In January 2021, we launched etonogestrel and ethinyl estradiol
vaginal ring, 0.120 mg/0.015 mg per day (the generic equivalent of
NuvaRing®) in the U.S., which is an estrogen/progestin combination
hormonal contraceptive (CHC) indicated for use by women to prevent
pregnancy.
In the first quarter of 2021, our total prescriptions were
approximately 322 million (based on trailing twelve months),
representing 9.2% of total U.S. generic prescriptions according to
IQVIA data.
AJOVY revenues in our North America segment in the first
quarter of 2021 were $31 million, an increase of $2 million, or 8%
compared to the first quarter of 2020, mainly due to growth in
volume. AJOVY is the only anti-CGRP product indicated for quarterly
treatment and in January 2021 we launched a new triple pack product
offering, providing quarterly dosing.
AUSTEDO revenues in our North America segment in the
first quarter of 2021 increased by 20% to $146 million, compared to
$122 million in the first quarter of 2020. This increase was mainly
due to growth in volume.
BENDEKA and TREANDA combined revenues in our North
America segment in the first quarter of 2021 decreased by 14% to
$91 million, compared to the first quarter of 2020, mainly due to
availability of alternative therapies and continued
competition.
COPAXONE revenues in our North America segment in the
first quarter of 2021 decreased by 17% to $164 million, compared to
the first quarter of 2020, mainly due to generic competition in the
United States.
ProAir (HFA and RespiClick) revenues in our North America
segment in the first quarter of 2021 decreased by 9% to $54
million, compared to the first quarter of 2020. In January 2019, we
launched our own ProAir authorized generic in the United States,
following the launch of a generic version of Ventolin® HFA, another
albuterol inhaler. Revenues from our ProAir authorized generic are
included in “generic products” above.
Anda revenues in our North America segment in the first
quarter of 2021 decreased by 32% to $289 million, compared to $426
million in the first quarter of 2020, mainly due to lower demand.
In addition, revenues were higher in first quarter of 2020 as a
result of significant customer stocking due to the COVID-19
pandemic.
North America Gross Profit
Gross profit from our North America segment in the first quarter
of 2021 was $1,074 million, an increase of 1%, compared to $1,062
million in the first quarter of 2020.
Gross profit margin for our North America segment in the first
quarter of 2021 increased to 54.0%, compared to 51.0% in the first
quarter of 2020. This increase was mainly due to the change in mix
of products.
North America Profit
Profit from our North America 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 North America segment in the first quarter of
2021 was $577 million, an increase of 5% compared to $550 million
in the first quarter of 2020, mainly due to higher gross profit, as
discussed above, as well as lower S&M expenses.
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 March 31, 2021 and
2020:
Three months ended March
31,
2021
2020
(U.S. $ in millions / % of
Segment Revenues)
Revenues
$
1,214
100%
$
1,402
100%
Gross profit
688
56.6%
823
58.7%
R&D expenses
66
5.4%
55
3.9%
S&M expenses
214
17.7%
202
14.4%
G&A expenses
70
5.8%
66
4.7%
Other income
§
§
(1)
§
Segment profit*
$
338
27.8%
$
502
35.8%
* Segment profit does not include
amortization and certain other items.
§ Represents an amount less than $1
million or 0.5%, as applicable.
Revenues from our Europe segment in the first quarter of
2021 were $1,214 million, a decrease of 13%, or $188 million,
compared to the first quarter of 2020. In local currency terms,
revenues decreased by 20%, mainly due to higher revenues in first
quarter of 2020 as a result of significant customer stocking due to
the COVID-19 pandemic. In addition, revenues were impacted by lower
demand of generic, OTC and respiratory products resulting from a
decline in doctor and hospital visits by patients resulting in
fewer prescriptions as well as lower sales of cough and cold
products, both due to the COVID-19 pandemic. The decrease in
revenues is also attributed to a decline in COPAXONE revenues due
to competing glatiramer acetate products and price declines in
oncology products as a result of generic competition.
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 March 31,
2021 and 2020:
Three months ended
March 31,
Percentage
Change
2021
2020
2020-2021
(U.S. $ in millions)
Generic products
$
865
$
1,032
(16%)
AJOVY
16
4
251%
COPAXONE
100
109
(8%)
Respiratory products
93
106
(12%)
Other
140
151
(7%)
Total
$
1,214
$
1,402
(13%)
Generic products revenues in our Europe segment in the
first quarter of 2021, including OTC products, decreased by 16% to
$865 million, compared to the first quarter of 2020. In local
currency terms, revenues decreased by 23% compared to the first
quarter of 2020, mainly due to higher revenues in first quarter of
2020 as a result of significant customer stocking due to the
COVID-19 pandemic. In addition, revenues were impacted by lower
demand of generic and OTC products resulting from a decline in
doctor and hospital visits by patients resulting in fewer
prescriptions as well as lower sales of cough and cold products,
both due to the COVID-19 pandemic.
AJOVY revenues in our Europe segment in the first quarter
of 2021 were $16 million, compared to $4 million in the first
quarter of 2020, mainly due to launches and reimbursements in
additional European countries.
COPAXONE revenues in our Europe segment in the first
quarter of 2021 decreased by 8% to $100 million, compared to the
first quarter of 2020. In local currency terms, revenues decreased
by 15%, due to price reductions and a decline in volume resulting
from competing glatiramer acetate products.
Respiratory products revenues in our Europe segment in
the first quarter of 2021 decreased by 12% to $93 million, compared
to the first quarter of 2020. In local currency terms, revenues
decreased by 19%, mainly due to significant customer stocking due
to the COVID-19 pandemic in first quarter of 2020, as well as
reduced demand resulting from COVID-19 restrictions in the first
quarter of 2021.
Europe Gross Profit
Gross profit from our Europe segment in the first quarter of
2021 was $688 million, a decrease of 17% compared to $823 million
in the first quarter of 2020.
Gross profit margin for our Europe segment in the first quarter
of 2021 decreased to 56.6%, compared to 58.7% in the first quarter
of 2020. This decrease was mainly due to lower revenues, as
discussed above and increased write-offs and obsolescence
provisions as a result of increased inventory levels.
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 first quarter of 2021 was
$338 million, a decrease of 33%, compared to $502 million in the
first quarter of 2020. This decrease was mainly due to lower
revenues, as discussed above.
International Markets Segment
Our International Markets segment includes all countries in
which we operate other than those in our North America and Europe
segments. The key markets in this segment are Japan, Russia and
Israel.
On February 1, 2021, we completed the sale of the majority of
the generic and operational assets of our business venture in
Japan.
The following table presents revenues, expenses and profit for
our International Markets segment for the three months ended March
31, 2021 and 2020:
Three months ended March
31,
2021
2020
(U.S. $ in millions / % of
Segment Revenues)
Revenues
$
490
100%
$
565
100%
Gross profit
260
53.0%
305
54.0%
R&D expenses
18
3.6%
15
2.7%
S&M expenses
96
19.6%
106
18.8%
G&A expenses
26
5.3%
34
6.0%
Other income
(2)
§
(6)
(1.1%)
Segment profit*
$
122
24.9%
$
156
27.6%
* Segment profit does not include
amortization and certain other items.
§ Represents an amount less than 0.5%.
Revenues from our International Markets segment in the first
quarter of 2021 were $490 million, a decrease of $75 million, or
13%, compared to the first quarter of 2020. In local currency
terms, revenues decreased by 7% compared to the first quarter of
2020, mainly due to lower revenues in Japan resulting from the
divestment mentioned above, as well as regulatory price reductions
and generic competition to off-patented products in Japan and lower
positive impact from hedging activity.
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 March 31, 2021 and 2020:
Three months ended
March 31,
Percentage
Change
2021
2020
2020-2021
(U.S. $ in millions)
Generic products
$
392
$
449
(13%)
COPAXONE
12
12
(1%)
Other
86
104
(17%)
Total
$
490
$
565
(13%)
Generic products revenues in our International Markets
segment in the first quarter of 2021, which include OTC products,
decreased by 13% to $392 million, compared to the first quarter of
2020. In local currency terms, revenues decreased by 11%, mainly
due to lower sales in Japan resulting from the divestment mentioned
above, as well as regulatory price reductions and generic
competition to off-patented products in Japan.
COPAXONE revenues in our International Markets segment in
the first quarter of 2021 were $12 million, flat compared to the
first quarter of 2020. In local currency terms, revenues increased
by 4%.
AJOVY was launched in certain International Markets
countries and we are moving forward with plans to launch in other
countries.
AUSTEDO launched in China for treatment of chorea
associated with Huntington disease and for the treatment of tardive
dyskinesia in early 2021. We continue with additional submissions
in various other countries.
International Markets Gross Profit
Gross profit from our International Markets segment in the first
quarter of 2021 was $260 million, a decrease of 15% compared to
$305 million in the first quarter of 2020.
Gross profit margin for our International Markets segment in the
first quarter of 2021 decreased to 53.0%, compared to 54.0% in the
first quarter of 2020. This decrease was mainly due to lower
positive impact from hedging activity and a change in mix of
products.
International Markets Profit
Profit from our International Markets 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 International Markets segment in the first
quarter of 2021 was $122 million, a decrease of 22%, compared to
$156 million in the first quarter of 2020. This decrease was mainly
due to lower positive impact from hedging activity, as well as
lower sales in Japan resulting from regulatory price reductions and
generic competition to off-patented products, partially offset by
lower S&M expenses.
Other Activities
We have other sources of revenues, primarily the sale of active
pharmaceutical ingredients ("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
described above.
Our revenues from other activities in the first quarter
of 2021 were $289 million, a decrease of 6% compared to the first
quarter of 2020. In local currency terms, revenues decreased by
9%.
API sales to third parties in the first quarter of 2021
were $178 million, flat in both U.S. dollar and local currency
terms, compared to the first quarter of 2020.
Conference Call
Teva will host a conference call and live webcast including a
slide presentation on Wednesday, April 28, 2021 at 8:00 a.m. ET to
discuss its first quarter of 2021 results and overall business
environment. A question & answer session will follow.
In order to participate, please dial the following numbers:
United States:
1 (866) 966-1396
International:
+44 (0) 2071 928000
Israel:
1 (809) 203-624
Passcode:
8347148
A live webcast of the call will be available on Teva’s website
at: ir.tevapharm.com.
Following the conclusion of the call, a replay of the webcast
will be available within 24 hours on the Company's website or by
calling United States 1-866-331-1332; International +44 (0) 3333
009785; passcode: 8347148.
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 http://www.tevapharm.com.
Some amounts in this press release may not add up due to
rounding. All percentages have been calculated using unrounded
amounts.
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, non-GAAP EPS, non-GAAP
operating income (loss), non-GAAP gross profit, non-GAAP gross
profit margin, EBITDA, Adjusted EBITDA, non-GAAP R&D expenses,
non-GAAP S&M expenses, non-GAAP G&A expenses, non-GAAP
financial expenses, non-GAAP income taxes, non-GAAP income (loss)
before income taxes, non-GAAP tax rate, non-GAAP net income (loss),
non-GAAP net income (loss) attributable to Teva 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. 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; delays in launches of new generic
products; the increase in the number of competitors targeting
generic opportunities and seeking U.S. market exclusivity for
generic versions of significant products; our ability to develop
and commercialize biopharmaceutical products; competition for our
specialty products, including AUSTEDO®, AJOVY® and COPAXONE®; our
ability to achieve expected results from investments in our product
pipeline; our ability to develop and commercialize additional
pharmaceutical products; 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: uncertainty
regarding the COVID-19 pandemic and its impact on our business,
financial condition, operations, cash flows, and liquidity and on
the economy in general; our ability to successfully execute and
maintain the activities and efforts related to the measures we have
taken or may take in response to the COVID-19 pandemic and
associated costs therewith; effectiveness of our optimization
efforts; our ability to attract, hire and retain highly skilled
personnel; 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 political or economic instability, major hostilities or
terrorism; costs and delays resulting from the extensive
pharmaceutical regulation to which we are subject or delays in
governmental processing time due to travel and work restrictions
caused by the COVID-19 pandemic;
- the effects of reforms in healthcare regulation and reductions
in pharmaceutical pricing, reimbursement and coverage; 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; and our prospects and
opportunities for growth if we sell assets;
- compliance, regulatory and litigation matters, including:
failure to comply with complex legal and regulatory environments;
increased legal and regulatory action in connection with public
concern over the abuse of opioid medications and our ability to
reach a final resolution of the remaining opioid-related
litigation; scrutiny from competition and pricing authorities
around the world, including our ability to successfully defend
against the U.S. Department of Justice criminal charges of Sherman
Act violations; potential liability for patent infringement;
product liability claims; failure to comply with complex Medicare
and Medicaid reporting and payment obligations; compliance with
anti-corruption sanctions and trade control laws; 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 (including as a result of
potential tax reform in the United States); 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 this press release, in our
Quarterly Report on Form 10-Q for the first quarter of 2021 and in
our Annual Report on Form 10-K for the year ended December 31,
2020, including in the sections captioned "Risk Factors” and
“Forward Looking Statements.” 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
March 31,
2021
2020
(Unaudited)
(Unaudited)
Net revenues
3,982
4,357
Cost of sales
2,104
2,294
Gross profit
1,878
2,063
Research and development expenses
254
221
Selling and marketing expenses
585
613
General and administrative expenses
290
304
Intangible assets impairments
79
649
Other asset impairments, restructuring and other items
137
121
Legal settlements and loss contingencies
104
(25)
Other income
(5)
(13)
Operating (loss) income
434
191
Financial expenses, net
290
224
Income (loss) before income taxes
144
(33)
Income taxes (benefit)
62
(59)
Share in (profits) losses of associated companies- net
(3)
1
Net income (loss)
84
25
Net income (loss) attributable to non-controlling interests
7
(44)
Net income (loss) attributable to Teva
77
69
Earnings (loss) per share attributable to
Teva: Basic ($)
0.07
0.06
Diluted ($)
0.07
0.06
Weighted average number of shares (in millions):
Basic
1,099
1,093
Diluted
1,107
1,096
Non-GAAP net income attributable to Teva:*
699
835
Non-GAAP net income attributable to Teva for diluted earnings
per share:
699
835
Non-GAAP earnings per share attributable to Teva:*
Basic ($)
0.64
0.76
Diluted ($)
0.63
0.76
Non-GAAP average number of shares (in millions):
Basic
1,099
1,093
Diluted
1,107
1,096
* See reconciliation attached.
Condensed Consolidated Balance Sheets
(U.S. dollars in millions)
March 31,
December 31,
2021
2020
ASSETS
(Unaudited)
(Audited)
Current assets: Cash and cash equivalents
1,743
2,177
Accounts receivables, net of allowance for credit losses of $119
million and $126 million as of March 31, 2021 and December 31,
2020.
4,572
4,581
Inventories
4,406
4,403
Prepaid expenses
942
945
Other current assets
652
710
Assets held for sale
87
189
Total current assets
12,401
13,005
Deferred income taxes
691
695
Other non-current assets
524
538
Property, plant and equipment, net
6,112
6,296
Operating lease right-of-use assets
529
559
Identifiable intangible assets, net
8,445
8,923
Goodwill
20,302
20,624
Total assets
49,004
50,640
LIABILITIES & EQUITY Current liabilities:
Short-term debt
2,697
3,188
Sales reserves and allowances
4,584
4,824
Accounts payables
1,692
1,756
Employee-related obligations
526
685
Accrued expenses
1,851
1,780
Other current liabilities
739
933
Total current liabilities
12,089
13,164
Long-term liabilities: Deferred income taxes
991
964
Other taxes and long-term liabilities
2,220
2,240
Senior notes and loans
22,288
22,731
Operating lease liabilities
441
479
Total long-term liabilities
25,940
26,414
Equity: Teva shareholders’ equity
10,000
10,026
Non-controlling interests
975
1,035
Total equity
10,975
11,061
Total liabilities and equity
49,004
50,640
TEVA PHARMACEUTICAL INDUSTRIES LIMITED CONSOLIDATED
STATEMENTS OF CASH FLOWS (U.S. dollars in millions)
(Unaudited)
Three months ended
March 31,
2021
2020
Operating activities: Net income (loss) $
84
$
25
Adjustments to reconcile net income (loss) to net cash provided by
operations: Depreciation and amortization
376
399
Impairment of long-lived assets and assets held for sale
127
724
Net change in operating assets and liabilities
(1,076)
(666)
Deferred income taxes – net and uncertain tax positions
(11)
(233)
Stock-based compensation
31
30
Net loss (gain) from investments and from sale of long lived assets
74
24
Other items
(10)
2
Net cash provided by (used in) operating activities
(405)
305
Investing activities: Beneficial interest
collected in exchange for securitized accounts receivables
476
368
Purchases of property, plant and equipment
(150)
(128)
Proceeds from sale of business and long-lived assets
138
6
Proceeds from sale of investments and other investing activities
44
6
Net cash provided by investing activities
508
252
Financing activities: Repayment of senior notes and
loans and other long-term liabilities
-
(700)
Redemption of convertible senior notes
(491)
-
Other financing activities
(2)
-
Net cash used in financing activities
(493)
(700)
Translation adjustment on cash and cash equivalents
(44)
(28)
Net change in cash and cash equivalents
(434)
(171)
Balance of cash and cash equivalents at beginning of period
2,177
1,975
Balance of cash and cash equivalents at end of period
$
1,743
$
1,804
Non-cash financing and investing activities:
Beneficial interest obtained in exchange for securitized accounts
receivables $
488
$
375
Three Months Ended March 31, 2021 U.S. $ and shares in
millions (except per share amounts)
GAAP
Excluded for non-GAAP
measurement
Non-GAAP
Amortization of purchased
intangible assets
Legal settlements and loss
contingencies
Impairment of long lived
assets
Other R&D expenses
Restructuring costs
Costs related to regulatory
actions taken in facilities
Equity compensation
Contingent consideration
Other non-GAAP items*
Other items
Net revenues
3,982
3,982
Cost of sales
2,104
215
5
6
41
1,838
Gross profit
1,878
215
-
-
-
-
5
6
-
41
-
2,144
Gross profit margin
47.2%
53.8%
R&D expenses
254
5
5
244
S&M expenses
585
27
9
549
G&A expenses
290
11
278
Other income
(5)
(5)
Legal settlements and loss contingencies
104
104
-
Other assets impairments, restructuring and other items
137
48
81
3
4
-
Intangible assets impairments
79
79
-
Operating income (loss)
434
242
104
127
5
81
5
31
3
45
-
1,077
Financial expenses, net
290
64
227
Income (loss) before income taxes
144
242
104
127
5
81
5
31
3
45
64
851
Income taxes
62
(85)
146
Share in profits (losses) of associated companies – net
(3)
2
(4)
Net income (loss)
84
242
104
127
5
81
5
31
3
45
(19)
709
Net income (loss) attributable to non-controlling interests
7
(3)
10
Net income (loss) attributable to Teva
77
242
104
127
5
81
5
31
3
45
(22)
699
Total reconciled items
242
104
127
5
81
5
31
3
45
(22)
EPS - Basic
0.07
0.57
0.64
EPS - Diluted
0.07
0.56
0.63
The non-GAAP diluted weighted average number of shares was
1,107 million for the three months ended March 31, 2021. Non-GAAP
income taxes for the three months ended March 31, 2021 were 17% on
pre-tax non-GAAP income. * Other non-GAAP items include other
exceptional items that we believe are sufficiently large that their
exclusion is important to facilitate an understanding of trends in
our financial results, such as certain accelerated depreciation
expenses and inventory write offs, primarily related to the
rationalization of our plants and other unusual events.
Adjusted EBITDA reconciliation Operating income
(loss)
434
Add: Depreciation
134
Amortization
242
EBITDA
809
Legal settlements and loss contingencies
104
Impairment of long lived assets
127
Other R&D expenses
5
Restructuring costs
81
Costs related to regulatory actions taken in facilities
5
Equity compensation
31
Contingent consideration
3
Other non-GAAP items (excluding accelerated depreciation of $5
million) *
40
Adjusted EBITDA
1,206
* Other non-GAAP items include other exceptional items that
we believe are sufficiently large that their exclusion is important
to facilitate an understanding of trends in our financial results,
such as certain accelerated depreciation expenses and inventory
write offs, primarily related to the rationalization of our plants
and other unusual events.
Three Months Ended March 31, 2020
U.S. $ and shares in millions (except per share amounts)
GAAP
Excluded for non-GAAP
measurement
Non-GAAP
Amortization of purchased
intangible assets
Legal settlements and loss
contingencies
Impairment of long lived
assets
Other R&D expenses
Restructuring costs
Costs related to regulatory
actions taken in facilities
Equity compensation
Contingent consideration
Other non-GAAP items*
Other items
Net revenues
4,357
4,357
Cost of sales
2,294
223
4
6
15
2,046
Gross profit
2,063
223
-
-
-
-
4
6
-
15
-
2,312
Gross profit margin
47.3%
53.1%
R&D expenses
221
(4)
5
221
S&M expenses
613
35
9
570
G&A expenses
304
10
4
290
Other income
(13)
(13)
Legal settlements and loss contingencies
(25)
(25)
-
Other assets impairments, restructuring and other items
121
75
39
6
1
-
Intangible assets impairments
649
649
-
Operating income (loss)
191
258
(25)
724
(4)
39
4
30
6
20
-
1,244
Financial expenses, net
224
11
213
Income (loss) before income taxes
(33)
258
(25)
724
(4)
39
4
30
6
20
11
1,030
Income taxes
(59)
(234)
175
Share in profits (losses) of associated companies – net
1
1
Net income (loss)
25
258
(25)
724
(4)
39
4
30
6
20
(223)
854
Net income (loss) attributable to non-controlling interests
(44)
(63)
20
Net income (loss) attributable to Teva
69
258
(25)
724
(4)
39
4
30
6
20
(286)
835
Total reconciled items
258
(25)
724
(4)
39
4
30
6
20
(286)
EPS - Basic
0.06
0.70
0.76
EPS - Diluted
0.06
0.70
0.76
The non-GAAP diluted weighted average number of shares was
1,096 million for the three months ended March 31, 2020. Non-GAAP
income taxes for the three months ended March 31, 2020 were 17% on
pre-tax non-GAAP income. * Other non-GAAP items include other
exceptional items that we believe are sufficiently large that their
exclusion is important to facilitate an understanding of trends in
our financial results, such as certain accelerated depreciation
expenses and inventory write offs, primarily related to the
rationalization of our plants and other unusual events.
Adjusted EBITDA reconciliation Operating income
(loss)
191
Add: Depreciation
141
Amortization
258
EBITDA
590
Legal settlements and loss contingencies
(25)
Impairment of long lived assets
724
Other R&D expenses
(4)
Restructuring costs
39
Costs related to regulatory actions taken in facilities
4
Equity compensation
30
Contingent consideration
6
Other non-GAAP items (excluding accelerated depreciation of $10
million) *
10
Adjusted EBITDA
1,375
* Other non-GAAP items include other exceptional items that
we believe are sufficiently large that their exclusion is important
to facilitate an understanding of trends in our financial results,
such as certain accelerated depreciation expenses and inventory
write offs, primarily related to the rationalization of our plants
and other unusual events.
Segment Information
North America
Europe
International Markets
Three months ended March
31,
Three months ended March
31,
Three months ended March
31,
2021
2020
2021
2020
2021
2020
(U.S. $ in millions) (U.S. $ in millions)
(U.S. $ in millions) Revenues $
1,989
$
2,082
$
1,214
$
1,402
$
490
$
565
Gross profit
1,074
1,062
688
823
260
305
R&D expenses
160
146
66
55
18
15
S&M expenses
229
251
214
202
96
106
G&A expenses
111
118
70
66
26
34
Other income
(3)
(2)
§
(1)
(2)
(6)
Segment profit $
577
$
550
$
338
$
502
$
122
$
156
§ Represents an amount less than $1 million.
Reconciliation of our segment profit to consolidated
income before income taxes
Three months ended
March 31,
2021
2020
(U.S.$ in millions) North America profit $
577
$
550
Europe profit
338
502
International Markets profit
122
156
Total segment profit
1,036
1,208
Profit of other activities
41
36
1,077
1,244
Amounts not allocated to segments: Amortization
242
258
Other asset impairments, restructuring and other items
137
121
Intangible asset impairments
79
649
Legal settlements and loss contingencies
104
(25)
Other unallocated amounts
82
49
Consolidated operating income (loss)
434
191
Financial expenses - net
290
224
Consolidated income (loss) before income taxes $
144
$
(33)
Segment revenues by major products and activities
(Unaudited)
Three months ended
March 31,
Percentage Change
2021
2020
2020-2021
(U.S.$ in millions) North America segment Generic
products $
1,053
$
952
11%
AJOVY
31
29
8%
AUSTEDO
146
122
20%
BENDEKA/TREANDA
91
105
(14%)
COPAXONE
164
198
(17%)
ProAir*
54
59
(9%)
Anda
289
426
(32%)
Other
161
191
(16%)
Total
1,989
2,082
(5%)
* Does not include revenues from the ProAir authorized
generic, which are included under generic products.
Three months
ended March 31, PercentageChange
2021
2020
2020-2021 (U.S.$ in millions) Europe segment
Generic products $
865
$
1,032
(16%)
AJOVY
16
4
251%
COPAXONE
100
109
(8%)
Respiratory products
93
106
(12%)
Other
140
151
(7%)
Total
1,214
1,402
(13%)
Three months ended
March 31,
Percentage Change
2021
2020
2020-2021
(U.S.$ in millions) International Markets segment
Generic products $
392
$
449
(13%)
COPAXONE
12
12
(1%)
Other
86
104
(17%)
Total
490
565
(13%)
Free cash flow reconciliation (Unaudited)
Three months ended March
31,
2021
2020
(U.S. $ in millions)
Net cash provided by (used in) operating activities
(405)
305
Beneficial interest collected in exchange for securitized accounts
receivables
476
368
Purchases of property, plant and equipment
(150)
(128)
Proceeds from sale of business and long lived assets
138
6
Free cash flow $
59
$
551
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428005445/en/
IR Contacts United States Kevin C. Mannix, (215)
591-8912 Israel Yael Ashman, 972 (3) 914-8262
PR Contacts United States Kelley Dougherty, (973)
832-2810 Israel Yonatan Beker, 972 (54) 888 5898
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