Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today reported its financial results for the third quarter ending September 30, 2024.
Teva’s President and CEO, Richard Francis, commented, “We’ve achieved our seventh consecutive quarter of growth, with global revenues reaching $4.3 billion, a 15% increase in local currency compared to the same period in 2023. Our growth was driven by strong performances across both our innovative portfolio and generics business, validating the success of our Pivot to Growth strategy. We’re committed to delivering on our ambitious targets, focusing on four key strategic pillars.”
Francis added, “With our accelerated pipeline, both early- and late-stage, we are well-positioned to continue expanding access to medicines while driving growth for our shareholders.”
Pivot to Growth Strategy
In May 2023, Teva introduced its “Pivot to Growth” strategy, centered on four pillars: (i) advancing key growth engines like AUSTEDO, AJOVY, UZEDY, and a late-stage pipeline of biosimilars; (ii) stepping up innovation by focusing on late-stage pipeline assets and expanding the early-stage pipeline through organic growth and business development; (iii) maintaining leadership in generics with a global footprint; and (iv) optimizing the company’s portfolio and manufacturing structure to accelerate near- and long-term growth.
Q3 2024 Financial Results
Teva’s third-quarter 2024 revenues totaled $4.33 billion, reflecting a 13% increase in U.S. dollars and 15% growth in local currency compared to Q3 2023. This growth was largely driven by higher sales of generic products, AUSTEDO in the U.S., and product rights sales in Europe and International Markets. Foreign exchange movements, including hedging effects, reduced revenues by $88 million compared to the prior year.
Gross profit in Q3 2024 was $2.15 billion, a 16% increase from $1.85 billion in Q3 2023, and the gross profit margin improved to 49.6%, compared to 48.1% last year. Non-GAAP gross profit was $2.33 billion, a 13% increase year-over-year. The improved margins were attributed to a favorable product mix, particularly AUSTEDO, though foreign exchange impacts partially offset the gains.
R&D expenses for Q3 2024 were $240 million, down 5% from $253 million in the previous year, mainly due to reimbursements from strategic partnerships and a decrease in expenses for late-stage innovative projects. However, R&D costs increased for immunology-related projects. Selling and marketing expenses increased by 9% to $626 million, supporting the growth of generic products and key brands like AUSTEDO and AJOVY.
General and administrative expenses rose 11% to $298 million, while other income climbed to $21 million from $9 million in Q3 2023, largely due to a capital gain from a business sale in the International Markets segment.
Teva reported an operating loss of $51 million for Q3 2024, down from an operating income of $344 million a year earlier. The loss was primarily due to a goodwill impairment charge and higher legal settlements, which were partially offset by higher gross profit. Non-GAAP operating income for Q3 2024 was $1.21 billion, with a non-GAAP operating margin of 28.0%, up from 26.5% in Q3 2023.
Teva’s net financial expenses were $272 million, slightly lower than $280 million in Q3 2023. The third-quarter 2024 net loss attributable to Teva was $437 million, or $0.39 per share, compared to a net income of $69 million, or $0.06 per share, in the prior year. Non-GAAP net income for the quarter was $798 million, or $0.69 per share, up from $677 million, or $0.60 per share, in Q3 2023.
Teva’s adjusted EBITDA for Q3 2024 was $1.33 billion, reflecting a 17% increase from $1.13 billion in the same quarter last year.
Balance Sheet and Cash Flow
Teva generated $693 million in operating cash flow in Q3 2024, compared to $5 million in the prior year. Free cash flow was $922 million, up from $229 million in Q3 2023, driven by improved operating cash flow. The company’s total debt as of September 30, 2024, was $18.98 billion, a reduction from $19.83 billion at the end of 2023.
Looking forward, Teva has raised its 2024 financial outlook, including increased revenue, adjusted EBITDA, and non-GAAP EPS projections.
