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Teva Pharmaceutical Industries Ltd.
Earnings Release • Jul 28, 2021
7082_rns_2021-07-28_f756150b-5a4d-4e66-914f-687eb84a52d7.pdf
Earnings Release
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TEVA REPORTS SECOND QUARTER 2021 FINANCIAL RESULTS
- Revenues of \$3.9 billion
- GAAP diluted EPS of \$0.19
- Non-GAAP diluted EPS of \$0.59
- Cash flow generated from operating activities of \$218 million
- Free cash flow of \$625 million
- 2021 revenue outlook revised lower to reflect ongoing impact of COVID-19; all other key components reaffirmed:
- o Net revenues of \$16.0 \$16.4 billion vs. previous range of \$16.4 \$16.8 billion
- o Adjusted EBITDA of \$4.8 \$5.1 billion
- o EPS of \$2.50 \$2.70
- o Free cash flow of \$2.0 \$2.3 billion
Tel Aviv, July 28, 2021 – Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) today reported results for the quarter ended June 30, 2021.
Mr. Kåre Schultz, Teva's President and CEO, said, "We have performed well in the second quarter, improving our profitability and free cash flow generation. This allowed us to reduce our net debt by an additional \$500 million to \$22.7 billion, once again demonstrating our commitment to and confidence in our long-term goals. Among our growth drivers, AUSTEDO® sales increased compared to the second quarter of last year, AJOVY® net sales have grown to \$70 million worldwide, and our biosimilar Truxima® continues to increase its U.S. market share, reaching 25%."
Mr. Schultz continued, "Throughout the pandemic we remain committed to serving patients, maintaining our operations and delivering quality affordable medicines. Due to the effects of the pandemic, we have lowered our 2021 revenue outlook, while reaffirming our earnings and cash flow guidance."
Second Quarter 2021 Consolidated Results
Revenues in the second quarter of 2021 were \$3,910 million, an increase of 1% or a decrease of 2% in local currency terms, compared to the second quarter of 2020. This decrease was mainly due to lower revenues in our North America segment, mainly related to COPAXONE® and Anda, partially offset by positive foreign currency impacts as well as higher revenues from generic products, OTC, AJOVY and COPAXONE in our Europe
| IR Contacts | United States | Kevin C. Mannix Yael Ashman |
(215) 591-8912 972 (3) 914-8262 |
|---|---|---|---|
| PR Contacts | United States | Kelley Dougherty | (973) 832-2810 |
| Israel | Yonatan Beker | 972 (54) 888 5898 |
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 second quarter of 2021, including hedging effects, positively impacted our revenues by \$135 million and our GAAP and non-GAAP operating income by \$26 million and \$30 million, respectively.
GAAP gross profit was \$1,873 million in the second quarter of 2021, an increase of 6% compared to the second quarter of 2020. GAAP gross profit margin was 47.9% in the second quarter of 2021, compared to 45.5% in the second quarter of 2020. The increase in gross profit margin was mainly driven by higher profitability in North America resulting from the change in mix of products and network optimization activities, partially offset by lower sales of COPAXONE. Non-GAAP gross profit was \$2,084 million in the second quarter of 2021, an increase of 4% compared to the second quarter of 2020. Non-GAAP gross profit margin was 53.3% in the second quarter of 2021, compared to 52.0% in the second quarter of 2020.
GAAP Research and Development (R&D) expenses in the second quarter of 2021 were \$248 million, an increase of 10% compared to the second quarter of 2020. Non-GAAP R&D expenses were \$243 million, or 6.2% of quarterly revenues, in the second quarter of 2021, compared to \$233 million, or 6%, in the second quarter of 2020. In the second quarter of 2021, our R&D expenses related primarily to specialty product candidates in the respiratory, migraine and headache therapeutic areas, with additional activities in selected other areas and generic products including biosimilars. Our higher R&D expenses in the second quarter of 2021, compared to the second quarter of 2020, were mainly due to an increase in respiratory and biosimilar projects as well as various generics projects.
GAAP Selling and Marketing (S&M) expenses in the second quarter of 2021 were \$615 million, an increase of 3% compared to the second quarter of 2020. Non-GAAP S&M expenses were \$582 million, or 14.9% of quarterly revenues, in the second quarter of 2021, compared to \$559 million, or 14.4%, in the second quarter of 2020.
GAAP General and Administrative (G&A) expenses in the second quarter of 2021 were \$242 million, a decrease of 8% compared to the second quarter of 2020. Non-GAAP G&A expenses were \$231 million, or 5.9% of quarterly revenues, in the second quarter of 2021, compared to \$245 million, or 6.3%, in the second quarter of 2020.
GAAP operating income in the second quarter of 2021 was \$582 million, compared to \$173 million in the second quarter of 2020. This increase was mainly due to lower other asset impairments, restructuring and other items charges and higher profit in our Europe segment, partially offset by higher intangible asset impairment charges. Non-GAAP operating income in the second quarter of 2021 was \$1,034 million, an increase of 6%, compared to \$979 million in the second quarter of 2020. The increase was mainly due to higher profit in our Europe segment.
| IR Contacts | United States | Kevin C. Mannix | (215) 591-8912 | |
|---|---|---|---|---|
Yael Ashman 972 (3) 914-8262
PR Contacts United States
Israel
Kelley Dougherty Yonatan Beker
EBITDA (defined as operating income, excluding amortization and depreciation expenses) was \$887 million in the second quarter of 2021, an increase of 60% compared to \$555 million in the second quarter of 2020. Adjusted EBITDA (defined as non-GAAP operating income excluding depreciation expenses) was \$1,162 million in the second quarter of 2021, an increase of 5% compared to \$1,108 million in the second quarter of 2020.
GAAP financial expenses were \$274 million in the second quarter of 2021, compared to \$223 million in the second quarter of 2020. Non-GAAP financial expenses were \$240 million in the second quarter of 2021, compared to \$229 million in the second quarter of 2020. Financial expenses in the second quarter of 2021, were mainly comprised of interest expenses of \$240 million and loss on revaluation of marketable securities of \$34 million. Financial expenses in the second quarter of 2020 were mainly comprised of interest expenses of \$241 million.
In the second quarter of 2021, we recognized a GAAP tax expense of \$98 million, on pretax income of \$308 million. In the second quarter of 2020, we recognized a tax benefit of \$104 million, on pre-tax loss of \$51 million. Our tax rate for the second quarter of 2021 was mainly affected by impairments, amortization and interest expense disallowance. Non-GAAP income taxes for the second quarter of 2021 were \$133 million, or 17%, on pre-tax non-GAAP income of \$794 million. Non-GAAP income taxes in the second quarter of 2020 were \$128 million, or 17%, on pre-tax non-GAAP income of \$751 million. Our non-GAAP tax rate for the second 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 \$207 million and \$0.19, respectively, in the second quarter of 2021, compared to \$140 million and \$0.13 in the second 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 second quarter of 2021 were \$651 million and \$0.59, respectively, compared to \$605 million and \$0.55 in the second 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 June 30, 2021 and 2020 was 1,109 million and 1,100 million shares, respectively.
As of June 30, 2021 and 2020, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,129 million and 1,119 million, respectively.
Non-GAAP information: Net non-GAAP adjustments in the second quarter of 2021 were \$444 million. Non-GAAP net income and non-GAAP EPS for the second quarter of 2021 were adjusted to exclude the following items:
| IR Contacts | United States | Kevin C. Mannix | (215) 591-8912 |
|---|---|---|---|
Yael Ashman 972 (3) 914-8262
PR Contacts United States
Israel
Kelley Dougherty Yonatan Beker
- Amortization of purchased intangible assets of \$173 million, of which \$148 million is included in cost of sales and the remaining \$25 million in S&M expenses;
- Impairment of long-lived assets of \$226 million, comprised mainly of impairment of intangible assets of IPR&D and product rights assets in connection with the Actavis Generics acquisition;
- Divested gain in amount of \$37 million, mainly from sale of certain OTC assets;
- Contingent consideration income of \$19 million, mainly related to a decrease in future royalties;
- Finance expense of \$34 million, mainly related to the American Well equity holding;
- Equity compensation expenses of \$29 million;
- Other items of \$74 million; and
- Income tax of \$36 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 during the second quarter of 2021 was \$218 million, compared to \$273 million generated in the second quarter of 2020. The decrease in the second quarter of 2021 was mainly due to favorable collection of payments from customers in the second quarter of 2020, which resulted from increased sales in the first quarter of 2020.
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 \$625 million in the second quarter of 2021, compared to \$582 million in the second quarter of 2020. The increase in the second quarter of 2021 resulted mainly from higher proceeds from divestitures of businesses and other assets, partially offset by lower cash flow from operating activities.
As of June 30, 2021, our debt was \$25,132 million, compared to \$24,986 million as of March 31, 2021. This increase was mainly due to exchange rate fluctuations. In July 2021, we repaid \$1,475 million of our 2.2% senior notes at maturity. The portion of total debt classified as short-term as of June 30, 2021 was 14%, compared to 11% as of March 31, 2021. Our average debt maturity was approximately 5.3 years as of June 30, 2021, compared to 5.6 years as of March 31, 2021. Our financial leverage was 69% as of June 30, 2021 and as of March 31, 2021.
| IR Contacts | United States | Kevin C. Mannix Yael Ashman |
(215) 591-8912 972 (3) 914-8262 |
|---|---|---|---|
| PR Contacts | United States | Kelley Dougherty | (973) 832-2810 |
| Israel | Yonatan Beker | 972 (54) 888 5898 |
Segment Results for the Second 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 June 30, 2021 and 2020:
| Three months ended June 30, |
|||||||
|---|---|---|---|---|---|---|---|
| 2021 | 2020 | ||||||
| (U.S. \$ in millions / % of Segment Revenues) |
|||||||
| Revenues | \$ 1,943 |
100% | \$ | 2,047 | 100% | ||
| Gross profit |
1,040 | 53.5% | 1,090 | 53.3% | |||
| R&D expenses |
162 | 8.4% | 154 | 7.5% | |||
| S&M expenses |
255 | 13.1% | 254 | 12.4% | |||
| G&A expenses |
106 | 5.5% | 110 | 5.4% | |||
| Other income |
(5) | § | (2) | § | |||
| Segment profit* |
\$ 521 |
26.8% | \$ | 573 | 28.0% |
* 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 second quarter of 2021 were \$1,943 million, a decrease of \$104 million, or 5%, compared to the second quarter of 2020, mainly due to a decrease in revenues from COPAXONE and Anda, partially offset by higher revenues from generic products, AUSTEDO and AJOVY. 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 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 \$1,818 million in the second quarter of 2021, a decrease of \$109 million, or 6%, compared to the second 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 June 30, 2021 and 2020:
IR Contacts United States Kevin C. Mannix (215) 591-8912 Yael Ashman 972 (3) 914-8262 PR Contacts United States Israel Kelley Dougherty Yonatan Beker (973) 832-2810 972 (54) 888 5898
| Three months ended June 30, |
Percentage Change |
||||
|---|---|---|---|---|---|
| 2021 | 2020 | 2020-2021 | |||
| (U.S. \$ in |
|||||
| Generic products |
\$ | 951 | \$ | 923 | 3% |
| AJOVY |
46 | 34 | 32% | ||
| AUSTEDO |
174 | 161 | 8% | ||
| BENDEKA®/TREANDA® | 106 | 103 | 3% | ||
| COPAXONE | 152 | 238 | (36%) | ||
| ProAir®* |
55 | 66 | (16%) | ||
| Anda | 316 | 374 | (16%) | ||
| Other | 144 | 147 | (2%) | ||
| Total | \$ | 1,943 | \$ | 2,047 | (5%) |
_________ * Does not include revenues from the ProAir authorized generic, which are included under generic products.
Generic products revenues in our North America segment (including biosimilars) in the second quarter of 2021 were \$951 million, an increase of 3% compared to the second quarter of 2020. This increase was mainly due to higher revenues from epipephrine injectable solution (the generic equivalent of EpiPen® and EpiPen Jr.®), Truxima® (the biosimilar to Rituxan®) and ProAir authorized generic, partially offset by lower volume and pricing of other generic products.
In the second quarter of 2021, our total prescriptions were approximately 314 million (based on trailing twelve months), representing 8.8% of total U.S. generic prescriptions according to IQVIA data.
AJOVY revenues in our North America segment in the second quarter of 2021 were \$46 million, an increase of \$11 million, or 32% compared to the second quarter of 2020, mainly due to growth in volume.
AUSTEDO revenues in our North America segment in the second quarter of 2021 increased by 8% to \$174 million, compared to \$161 million in the second quarter of 2020. This increase was mainly due to growth in volume.
BENDEKA and TREANDA combined revenues in our North America segment in the second quarter of 2021 increased by 3% to \$106 million, compared to the second quarter of 2020, mainly due to higher sales of oncology products during the recovery from the COVID-19 pandemic, partially offset by availability of alternative therapies and continued
IR Contacts United States Kevin C. Mannix (215) 591-8912 Yael Ashman 972 (3) 914-8262
PR Contacts United States
Israel
Kelley Dougherty Yonatan Beker
competition from Belrapzo® (a ready-to-dilute bendamustine hydrochloride product from Eagle Pharmaceuticals, Inc.).
COPAXONE revenues in our North America segment in the second quarter of 2021 decreased by 36% to \$152 million, compared to the second quarter of 2020, mainly due to generic competition in the United States.
ProAir (HFA and RespiClick) revenues in our North America segment in the second quarter of 2021 decreased by 16% to \$55 million, compared to the second quarter of 2020. Revenues from our ProAir authorized generic are included in "generic products" above.
Anda revenues in our North America segment in the second quarter of 2021 decreased by 16% to \$316 million, compared to \$374 million in the second quarter of 2020, mainly due to lower demand by Anda's customers for generic products.
North America Gross Profit
Gross profit from our North America segment in the second quarter of 2021 was \$1,040 million, a decrease of 5%, compared to \$1,090 million in the second quarter of 2020. This decrease was mainly due to lower gross profit from Anda and COPAXONE.
Gross profit margin for our North America segment in the second quarter of 2021 increased to 53.5%, compared to 53.3% in the second quarter of 2020. This increase was mainly due to a change in the 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 second quarter of 2021 was \$521 million, a decrease of 9% compared to \$573 million in the second quarter of 2020, mainly due to lower gross profit, as discussed above, as well as higher R&D 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 June 30, 2021 and 2020:
| Three months ended June 30, |
|||||
|---|---|---|---|---|---|
| 2021 | 2020 | ||||
| (U.S. \$ in |
millions / % |
of Segment |
Revenues) | ||
| Revenues | \$ 1,184 |
100% | \$ 1,001 |
100% | |
| Gross profit |
661 | 55.8% | 548 | 54.7% | |
| R&D expenses |
63 | 5.3% | 65 | 6.5% | |
| S&M expenses |
209 | 17.7% | 188 | 18.8% | |
| G&A expenses |
47 | 4.0% | 52 | 5.2% | |
| Other income |
§ | § | (1) | § | |
| Segment profit* |
\$ 343 |
28.9% | \$ 244 |
24.3% |
___________ * 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 second quarter of 2021 were \$1,184 million, an increase of 18%, or \$183 million, compared to the second quarter of 2020. In local currency terms, revenues increased by 8%, mainly due to changed buying patterns in the second quarter of 2020 as a result of significant customer stocking due to the COVID-19 pandemic in March 2020, and a decline in doctor and hospital visits by patients resulting in fewer prescriptions during the second quarter of 2020.
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 June 30, 2021 and 2020:
| Three months ended June 30, |
Percentage Change |
||||
|---|---|---|---|---|---|
| 2021 | 2020 | 2020-2021 | |||
| (U.S. \$ in |
millions) | ||||
| Generic products |
\$ | 878 | \$ | 737 | 19% |
| AJOVY |
19 | 5 | 302% | ||
| COPAXONE | 100 | 84 | 19% | ||
| Respiratory products |
85 | 80 | 7% | ||
| Other | 102 | 95 | 7% | ||
| Total | \$ | 1,184 | \$ | 1,001 | 18% |
Generic products revenues in our Europe segment in the second quarter of 2021, including OTC products, increased by 19% to \$878 million, compared to the second quarter of 2020. In local currency terms, revenues increased by 9% compared to the second quarter of 2020, mainly due to lower revenues in the second quarter of 2020 as a result of significant
| IR Contacts | United States | Kevin C. Mannix Yael Ashman |
(215) 591-8912 972 (3) 914-8262 |
|---|---|---|---|
| PR Contacts | United States Israel |
Kelley Dougherty Yonatan Beker |
(973) 832-2810 972 (54) 888 5898 |
changes in buying patterns and customer stocking due to the COVID-19 pandemic. In addition, revenues in the second quarter of 2020 were impacted by lower demand of generic products resulting from a decline in doctor and hospital visits by patients resulting in fewer prescriptions as well as lower sales of OTC products resulting from lower demand for cough and cold products, both due to the COVID-19 pandemic.
AJOVY revenues in our Europe segment in the second quarter of 2021 were \$19 million, compared to \$5 million in the second quarter of 2020, mainly due to launches and reimbursements in additional European countries.
COPAXONE revenues in our Europe segment in the second quarter of 2021 increased by 19% to \$100 million, compared to the second quarter of 2020. In local currency terms, revenues increased by 9%, mainly due to customer stocking due to the COVID-19 pandemic in March 2020, resulting in significant changes in buying patterns in the second quarter of 2020.
Respiratory products revenues in our Europe segment in the second quarter of 2021 increased by 7% to \$85 million, compared to the second quarter of 2020. In local currency terms, revenues decreased by 4%, mainly due to lower sales in the United Kingdom, partially offset by changes in buying patterns in the second quarter of 2020 as a result of significant customer stocking due to the COVID-19 pandemic in March 2020.
Europe Gross Profit
Gross profit from our Europe segment in the second quarter of 2021 was \$661 million, an increase of 21% compared to \$548 million in the second quarter of 2020.
Gross profit margin for our Europe segment in the second quarter of 2021 increased to 55.8%, compared to 54.7% in the second quarter of 2020. This increase was mainly due to a change in product mix.
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 second quarter of 2021 was \$343 million, an increase of 41%, compared to \$244 million in the second quarter of 2020. This increase was mainly due to higher 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.
IR Contacts United States Kevin C. Mannix (215) 591-8912
Yael Ashman 972 (3) 914-8262
PR Contacts United States
Israel
Kelley Dougherty Yonatan Beker
__________
On February 1, 2021, we completed the sale of the majority of the generic and operational assets of our business venture in Japan.
| Three months ended June 30, |
||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| (U.S. \$ in |
millions / % |
of Segment |
Revenues) | |||
| Revenues | \$ 485 |
100% | \$ | 488 | 100% | |
| Gross profit |
270 | 55.7% | 247 | 50.8% | ||
| R&D expenses |
18 | 3.6% | 19 | 3.9% | ||
| S&M expenses |
105 | 21.7% | 105 | 21.4% | ||
| G&A expenses |
25 | 5.1% | 29 | 6.0% | ||
| Other income |
(1) | § | (2) | § | ||
| Segment profit* |
\$ 123 |
25.5% | \$ | 97 | 19.9% |
The following table presents revenues, expenses and profit for our International Markets segment for the three months ended June 30, 2021 and 2020:
* 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 second quarter of 2021 were \$485 million, a decrease of \$3 million, or 1%, compared to the second quarter of 2020. In local currency terms, revenues decreased by 3% compared to the second 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 negative impact from hedging activity, partially offset by higher revenues in most other markets as well as lower revenues in certain markets in the second quarter of 2020, resulting from reduced demand due to the impact the COVID-19 pandemic had on purchasing patterns.
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 June 30, 2021 and 2020:
| Three months ended June 30, |
Percentage Change |
||||
|---|---|---|---|---|---|
| 2021 | 2020 | 2020-2021 | |||
| (U.S. \$ in |
millions) | ||||
| Generic products |
\$ 407 |
\$ | 426 | (5%) | |
| COPAXONE | 7 | 12 | (35%) | ||
| Other | 71 | 50 | 42% | ||
| Total | \$ 485 |
\$ | 488 | (1%) | |
Generic products revenues in our International Markets segment in the second quarter of 2021, which include OTC products, decreased by 5% to \$407 million, in both U.S. dollar and local currency terms, compared to the second quarter of 2020. This decrease was 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, partially offset by higher revenues in most other markets as well as lower revenues in certain markets in the second quarter of 2020, resulting from reduced demand due to the impact the COVID-19 pandemic had on purchasing patterns.
COPAXONE revenues in our International Markets segment in the second quarter of 2021 were \$7 million, a decrease of 35% compared to \$12 million in the second quarter of 2020. In local currency terms, revenues decreased by 33%.
AJOVY was launched in certain markets in our International Markets segment and we are moving forward with plans to launch in other markets. On June 23, 2021, AJOVY was approved for the preventative treatment of migraine in adults in Japan.
AUSTEDO was 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 second quarter of 2021 was \$270 million, an increase of 9% compared to \$247 million in the second quarter of 2020.
Gross profit margin for our International Markets segment in the second quarter of 2021 increased to 55.7%, compared to 50.8% in the second quarter of 2020. This increase was mainly due to the divestment in Japan mentioned above and a change in product portfolio mix.
IR Contacts United States Kevin C. Mannix (215) 591-8912 Yael Ashman 972 (3) 914-8262
PR Contacts United States
Israel
Kelley Dougherty Yonatan Beker
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 second quarter of 2021 was \$123 million, an increase of 27%, compared to \$97 million in the second quarter of 2020. This increase was mainly due to higher gross profit as discussed above.
Other Activities
Israel
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 second quarter of 2021 were \$298 million, a decrease of 11% compared to the second quarter of 2020. In local currency terms, revenues decreased by 13%, mainly due to a decrease in volumes from API and Medis resulting from the COVID-19 pandemic.
API sales to third parties in the second quarter of 2021 were \$199 million, a decrease of 6% in both U.S. dollar and local currency terms, compared to the second quarter of 2020.
972 (54) 888 5898
Yonatan Beker
Conference Call
Teva will host a conference call and live webcast including a slide presentation on Wednesday, July 28, 2021 at 8:00 a.m. ET to discuss its second quarter of 2021 results and overall business environment. A question & answer session will follow.
In order to participate, please dial the following numbers:
| Passcode: | 9693275 |
|---|---|
| Israel: | 1 (809) 213-985 |
| International: | +44 (0) 2071 928338 |
| United States: |
1 (877) 870-9135 |
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: 9693275.
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, 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
| IR Contacts | United States | Kevin C. Mannix Yael Ashman |
(215) 591-8912 972 (3) 914-8262 |
|---|---|---|---|
| PR Contacts | United States | Kelley Dougherty | (973) 832-2810 |
| Israel | Yonatan Beker | 972 (54) 888 5898 |
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
| IR Contacts | United States | Kevin C. Mannix Yael Ashman |
(215) 591-8912 972 (3) 914-8262 |
|---|---|---|---|
| PR Contacts | United States | Kelley Dougherty | (973) 832-2810 |
| Israel | Yonatan Beker | 972 (54) 888 5898 |
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 opioidrelated 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 second 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 June 30, |
Six months ended June 30, |
|||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||
| Net revenues | 3,910 | 3,870 | 7,892 | 8,227 | ||
| Cost of sales | 2,037 | 2,107 | 4,141 | 4,402 | ||
| Gross profit | 1,873 | 1,763 | 3,750 | 3,826 | ||
| Research and development expenses | 248 | 225 | 501 | 446 | ||
| Selling and marketing expenses | 615 | 597 | 1,200 | 1,210 | ||
| General and administrative expenses | 242 | 264 | 532 | 567 | ||
| Intangible assets impairments | 195 | 120 | 274 | 768 | ||
| Other asset impairments, restructuring and other items | 28 | 381 | 165 | 502 | ||
| Legal settlements and loss contingencies | 6 | 13 | 110 | (12) | ||
| Other income | (43) | (9) | (48) | (22) | ||
| Operating (loss) income | 582 | 173 | 1,015 | 364 | ||
| Financial expenses, net | 274 | 223 | 564 | 448 | ||
| Income (loss) before income taxes | 308 | (51) | 451 | (84) | ||
| Income taxes (benefit) | 98 | (104) | 159 | (163) | ||
| Share in (profits) losses of associated companies, net | (11) | - | (14) | - | ||
| Net income (loss) | 221 | 53 | 306 | 78 | ||
| Net income (loss) attributable to non-controlling interests | 14 | (87) | 21 | (131) | ||
| Net income (loss) attributable to Teva | 207 | 140 | 284 | 209 | ||
| Earnings (loss) per share attributable to Teva: | ||||||
| Basic (\$) Diluted |
0.19 | 0.13 | 0.26 | 0.19 | ||
| (\$) | 0.19 | 0.13 | 0.26 | 0.19 | ||
| Weighted average number of shares (in millions): | Basic | 1,103 | 1,096 | 1,101 | 1,095 | |
| Diluted | 1,109 | 1,100 | 1,108 | 1,098 | ||
| Non-GAAP net income attributable to Teva:* | 651 | 605 | 1,350 | 1,440 | ||
| Non-GAAP net income attributable to Teva for diluted earnings per share: | 651 | 605 | 1,350 | 1,440 | ||
| Non-GAAP earnings per share attributable to Teva:* | Basic | 0.59 | 0.55 | 1.23 | 1.32 | |
| Diluted | 0.59 | 0.55 | 1.22 | 1.31 | ||
Non-GAAP average number of shares (in millions): Basic 1,096 1,103 1,101 1,095 Diluted 1,100 1,109 1,108 1,098
* See reconciliation attached.
Condensed Consolidated Balance Sheets
(U.S. dollars in millions)
| June 30, | December 31, | |||
|---|---|---|---|---|
| 2021 | 2020 | |||
| ASSETS | (Unaudited) | (Audited) | ||
| Current assets: | ||||
| Cash and cash equivalents | 2,436 | 2,177 | ||
| Accounts receivables, net of allowance for credit losses of \$120 | ||||
| million and \$126 million as of June 30, 2021 and December 31, 2020. |
||||
| 4,488 | 4,581 | |||
| Inventories | 4,362 1,022 |
4,403 | ||
| Prepaid expenses | 945 | |||
| Other current assets | 484 | 710 | ||
| Assets held for sale | 29 | 189 | ||
| Total current assets | 12,822 | 13,005 | ||
| Deferred income taxes | 645 | 695 | ||
| Other non-current assets | 530 | 538 | ||
| Property, plant and equipment, net | 6,127 | 6,296 | ||
| Operating lease right-of-use assets | 531 | 559 | ||
| Identifiable intangible assets, net | 8,120 | 8,923 | ||
| Goodwill | 20,421 | 20,624 | ||
| Total assets | 49,195 | 50,640 | ||
| LIABILITIES & EQUITY | ||||
| Current liabilities: | ||||
| Short-term debt | 3,530 | 3,188 | ||
| Sales reserves and allowances | 4,453 | 4,824 | ||
| Accounts payables | 1,551 | 1,756 | ||
| Employee-related obligations | 511 | 685 | ||
| Accrued expenses | 1,807 | 1,780 | ||
| Other current liabilities | 838 | 933 | ||
| Total current liabilities | 12,691 | 13,164 | ||
| Long-term liabilities: | ||||
| Deferred income taxes | 932 | 964 | ||
| Other taxes and long-term liabilities | 2,215 | 2,240 | ||
| Senior notes and loans | 21,602 | 22,731 | ||
| Operating lease liabilities | 444 | 479 | ||
| Total long-term liabilities | 25,193 | 26,414 | ||
| Equity: | ||||
| Teva shareholders' equity | 10,324 | 10,026 | ||
| Non-controlling interests | 987 | 1,035 | ||
| Total equity | 11,311 | 11,061 | ||
| Total liabilities and equity | 49,195 | 50,640 |
TEVA PHARMACEUTICAL INDUSTRIES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in millions)
(Unaudited)
| Six months ended June 30, |
Three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| June 30, | |||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||
| Operating activities: | |||||||||
| Net income (loss) Adjustments to reconcile net income (loss) to net cash provided by operations: |
\$ | 306 | \$ | 78 | \$ | 222 \$ | 53 | ||
| Depreciation and amortization | 681 | 781 | 305 | 382 | |||||
| Impairment of long-lived assets and assets held for sale | 354 | 1,120 | 226 | 395 | |||||
| Net change in operating assets and liabilities | (1,679) | (1,002) | (603) | (336) | |||||
| Deferred income taxes – net and uncertain tax positions | 5 | (502) | 16 | (269) | |||||
| Stock-based compensation | 60 | 62 | 29 | 32 | |||||
| Net loss (gain) from investments and from sale of long lived assets | 93 | 24 | 19 | - | |||||
| Other items | (7) | 17 | 4 | 15 | |||||
| Net cash provided by (used in) operating activities | (187) | 578 | 218 | 273 | |||||
| Investing activities: | |||||||||
| Beneficial interest collected in exchange for securitized accounts receivables | 881 | 769 | 405 | 401 | |||||
| Purchases of property, plant and equipment | (263) | (259) | (113) | (131) | |||||
| Proceeds from sale of business and long-lived assets | 254 | 45 | 116 | 39 | |||||
| Proceeds from sale of investments | 153 | 9 | 107 | 6 | |||||
| Other investing activities | (36) | 1 | (34) | (2) | |||||
| Net cash provided by investing activities | 989 | 564 | 481 | 313 | |||||
| Financing activities: | |||||||||
| Repayment of senior notes and loans and other long-term liabilities | - | (700) | - | - | |||||
| Redemption of convertible senior notes | (491) | - | - | - | |||||
| Other financing activities | (3) | (3) | (1) | (3) | |||||
| Net cash used in financing activities | (494) | (703) | (1) | (3) | |||||
| Translation adjustment on cash and cash equivalents | (49) | (13) | (5) | 15 | |||||
| Net change in cash and cash equivalents | 259 | 427 | 693 | 598 | |||||
| Balance of cash and cash equivalents at beginning of period | 2,177 | 1,975 | 1,743 | 1,804 | |||||
| Balance of cash and cash equivalents at end of period | \$ | 2,436 | \$ | 2,402 | \$ | 2,436 \$ | 2,402 | ||
| Non-cash financing and investing activities: | |||||||||
| Beneficial interest obtained in exchange for securitized accounts receivables | \$ | 878 | 728 | \$ | 390 \$ | 353 |
| GAAP | Excluded for non-GAAP measurement | Non-GAAP | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Amortization of purchased intangible assets |
Legal settlements and loss contingencies |
Impairment of long lived assets |
Restructuring costs |
Costs related to regulatory actions taken |
Equity compensation |
Contingent consideration |
Other non-GAAP items* |
Other items | |||
| Net revenues | 3,910 | 3,910 | |||||||||
| Cost of sales | 2,037 | 148 | 8 | 6 | 50 | 1,826 | |||||
| Gross profit | 1,873 | 148 | 8 | 6 | 50 | 2,084 | |||||
| Gross profit margin | 47.9% | 53.3% | |||||||||
| R&D expenses | 248 | 5 | 243 | ||||||||
| S&M expenses | 615 | 25 | 8 | 582 | |||||||
| G&A expenses | 242 | 11 | 231 | ||||||||
| Other income | (43) | (37) | (6) | ||||||||
| Legal settlements and loss contingencies |
6 | 6 | - | ||||||||
| Other assets impairments, restructuring and other items |
28 | 32 | (13) | (19) | 28 | - | |||||
| Intangible assets impairments | 195 | 195 | - | ||||||||
| Operating income (loss) | 582 | 173 | 6 | 226 | (13) | 8 | 29 | (19) | 42 | 1,033 | |
| Financial expenses, net | 274 | 34 | 240 | ||||||||
| Income (loss) before income taxes | 308 | 173 | 6 | 226 | (13) | 8 | 29 | (19) | 42 | 34 | 794 |
| Income taxes | 98 | (36) | 133 | ||||||||
| Share in (profits) losses of associated companies – net |
(11) | (3) | (8) | ||||||||
| Net income (loss) | 221 | 173 | 6 | 226 | (13) | 8 | 29 | (19) | 42 | (5) | 669 |
| Net income (loss) attributable to non controlling interests |
14 | (3) | 18 | ||||||||
| Net income (loss) attributable to Teva | 207 | 173 | 6 | 226 | (13) | 8 | 29 | (19) | 42 | (8) | 651 |
| EPS - Basic | 0.19 | 0.40 | 0.59 | ||||||||
| EPS - Diluted | 0.19 | 0.40 | 0.59 |
The non-GAAP diluted weighted average number of shares was 1,109 million for the three months ended June 30, 2021. Non-GAAP income taxes for the three months ended June 30, 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) | 582 |
|---|---|
| Add: | |
| Depreciation | 134 |
| Amortization | 173 |
| EBITDA | 887 |
| Legal settlements and loss contingencies |
6 |
| Impairment of long lived assets | 226 |
| Restructuring costs | (13) |
| Costs related to regulatory actions taken in facilities |
8 |
| Equity compensation | 29 |
| Contingent consideration | (19) |
| Other non-GAAP items (excluding accelerated depreciation of \$4 million)* |
37 |
| Adjusted EBITDA | 1,162 |
U.S. \$ and shares in millions (except per share amounts)
Three Months Ended June 30, 2021
| Six Months Ended June 30, 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 |
Restructuring costs |
Costs related to regulatory actions taken in facilities |
Equity compensation |
Contingent consideration |
Other non GAAP items* Other items |
||||
| Net revenue | 7,892 | 7,892 | |||||||||
| Cost of sales | 4,141 | 363 | 13 | 12 | 91 | 3,663 | |||||
| Gross profit | 3,750 | 363 | 13 | 12 | 91 | 4,228 | |||||
| Gross profit margin | 47.5% | 53.6% | |||||||||
| R&D expenses | 501 | 10 | 5 | 487 | |||||||
| S&M expenses | 1,200 | 52 | 18 | - | 1,131 | ||||||
| G&A expenses | 532 | 21 | 0 | 510 | |||||||
| Other (income) expense | (48) | (37) | (11) | ||||||||
| Legal settlements and loss | |||||||||||
| contingencies | 110 | 110 | - | ||||||||
| Other assets impairments, | |||||||||||
| restructuring and other items | 165 | 80 | 69 | (16) 33 |
- | ||||||
| Intangible assets impairment | 274 | 274 | - | ||||||||
| Operating income (loss) | 1,015 | 414 | 110 | 354 | 69 | 13 | 60 | (16) | 92 | 2,111 | |
| Financial expenses, net | 564 | 98 | 467 | ||||||||
| Income (loss) before income taxes | 451 | 414 | 110 | 354 | 69 | 13 | 60 | (16) 92 |
98 | 1,644 | |
| 159 | (120) | 280 | |||||||||
| Income taxes Share in (profits) losses of |
(14) | (1) (13) | |||||||||
| associated companies – net | 306 | 414 | 110 | 354 | 69 | 13 | 60 | (16) | 92 | (24) | 1,377 |
| Net income (loss) | |||||||||||
| Net income (loss) attributable to | 21 | (6) | 28 | ||||||||
| non-controlling interests | |||||||||||
| Net income (loss) attributable to Teva |
284 | 414 | 110 | 354 | 69 | 13 | 60 | (16) 92 |
(30) 1,350 | ||
| EPS - Basic | 0.26 | 0.97 | 1.23 | ||||||||
| EPS - Diluted | 0.26 | 0.96 | 1.22 |
The non-GAAP diluted weighted average number of shares was 1,108 million for the six months ended June 30, 2021.
Non-GAAP income taxes for the six months ended June 30, 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
Adjusted EBITDA reconciliation
| Operating income (loss) Add: |
1,015 | |
|---|---|---|
| Depreciation | 266 | |
| Amortization | 414 | |
| EBITDA | 1,696 | |
| Legal settlements and loss contingencies |
110 | |
| Impairment of long lived assets | 354 | |
| Restructuring costs | 69 | |
| Costs related to regulatory actions taken in facilities |
13 | |
| Equity compensation | 60 | |
| Contingent consideration | (16) | |
| Other non-GAAP items (excluding accelerated depreciation of \$9 million)* |
83 | |
| Adjusted EBITDA | 2,368 |
| Three Months Ended June 30, 2020 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| U.S. \$ and shares in millions (except per share amounts) GAAP Excluded for non-GAAP measurement |
Non-GAAP | ||||||||||||
| Amortization | Legal | Other | |||||||||||
| of purchased intangible assets |
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 |
non GAAP items* |
Other items | ||||
| Net revenues | 3,870 | 3,870 | |||||||||||
| Cost of sales | 2,107 | 219 | 6 | 6 | 16 | 1,859 | |||||||
| Gross profit | 1,763 | 219 | 6 | 6 | 16 | 2,011 | |||||||
| Gross profit margin | 45.5% | 52.0% | |||||||||||
| R&D expenses | 225 | (13) | 5 | 233 | |||||||||
| S&M expenses | 597 | 30 | 8 | 559 | |||||||||
| G&A expenses | 264 | 11 | 8 | 245 | |||||||||
| Other income | (9) | (4) | (6) | ||||||||||
| Legal settlements and loss | |||||||||||||
| contingencies | 13 | 13 | - | ||||||||||
| Other assets impairments, restructuring and other items |
381 | 277 | 33 | 76 | (6) | - | |||||||
| Intangible assets impairments | 120 | 120 | - | ||||||||||
| Operating income (loss) Financial expenses, net |
173 223 |
249 | 13 | 396 | (13) | 33 | 6 | 30 | 76 | 14 | (5) | 979 229 |
|
| Income (loss) before income taxes Income taxes |
(104) | (51) 249 |
13 | 396 | (13) | 33 | 6 | 30 | 76 | 14 | (231) | (5) 751 128 |
|
| Net income (loss) | 53 | 249 | 13 | 396 | (13) | 33 | 6 | 30 | 76 | 14 | (237) | 623 | |
| Net income (loss) attributable to non controlling interests |
(87) | (105) | 19 | ||||||||||
| Net income (loss) attributable to Teva | 140 | 249 | 13 | 396 | (13) | 33 | 6 | 30 | 76 | 14 | (342) | 605 | |
| EPS - Basic | 0.13 | 0.42 | 0.55 | ||||||||||
| EPS - Diluted | 0.13 | 0.42 | 0.55 | ||||||||||
The non-GAAP diluted weighted average number of shares was 1,100 million for the three months ended June 30, 2020.
Non-GAAP income taxes for the three months ended June 30, 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) | 173 | |
|---|---|---|
| Add: | ||
| Depreciation | 134 | |
| Amortization | 249 | |
| EBITDA | 555 | |
| Legal settlements and loss contingencies |
13 | |
| Impairment of long lived assets | 396 | |
| Other R&D expenses | (13) | |
| Restructuring costs | 33 | |
| Costs related to regulatory actions taken in facilities |
6 | |
| Equity compensation | 30 | |
| Contingent consideration | 76 | |
| Other non-GAAP items (excluding | ||
| accelerated depreciation of \$6 | 8 | |
| million)* Adjusted EBITDA |
||
| 1,108 |
Six months ended June 30, 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 |
Restructuring costs |
Costs related to regulatory actions taken in facilities |
Equity compensation |
Contingent consideration |
Other non GAAP items* |
Other items |
|||
| Net revenue | 8,227 | 8,227 | |||||||||
| Cost of sales | 4,402 | 443 | 11 | 12 | 32 | 3,905 | |||||
| Gross profit | 3,826 | 443 | 11 | 12 | 32 | 4,322 | |||||
| Gross profit margin | 46.5% | 52.5% | |||||||||
| R&D expenses | 446 | 9 | (17) | 454 | |||||||
| S&M expenses | 1,210 | 64 | 17 | 1,129 | |||||||
| G&A expenses | 567 | 21 | 12 | 535 | |||||||
| Other (income) expense Legal settlements and loss |
(22) | (3) | (19) | ||||||||
| contingencies | (12) | (12) | - | ||||||||
| Other assets impairments, | |||||||||||
| restructuring and other items | 502 | 352 | 73 | 83 (5) |
- | ||||||
| Intangible assets impairment | 768 | 768 | - | ||||||||
| Operating income (loss) | 364 | 507 | (12) | 1,121 | 73 | 11 | 60 | 83 18 |
- 2,223 |
||
| Financial expenses, net | 448 | 6 442 |
|||||||||
| Income (loss) before income taxes Income taxes |
(163) | (84) 507 |
(12) 1,121 |
73 | 11 | 60 | 83 18 |
6 1,781 (465) 303 |
|||
| Net income (loss) attributtible to Teva Net income (loss) attributable to non |
78 | 507 | (12) 1,121 |
73 | 11 | 60 | 83 18 |
(460) 1,478 |
|||
| controlling interests | (131) | (169) | 38 | ||||||||
| Net income (loss) | 209 | 507 | (12) 1,121 |
73 | 11 | 60 | 83 18 |
(629) 1,440 |
|||
| EPS - Basic | 0.19 | 1.32 | |||||||||
| EPS - Diluted | 0.19 | 1.31 |
The non-GAAP diluted weighted average number of shares was 1,098 million for the six months ended June 30, 2020.
Non-GAAP income taxes for the six months ended June 30, 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) | 364 |
|---|---|
| Add: | |
| Depreciation | 275 |
| Amortization | 507 |
| EBITDA | 1,146 |
| Legal settlements and loss contingencies |
(12) |
| Impairment of long lived assets | 1,121 |
| Restructuring costs | 73 |
| Costs related to regulatory actions taken in facilities |
11 |
| Equity compensation | 60 |
| Contingent consideration | 83 |
| Other non-GAAP items (excluding accelerated depreciation of \$16 million)* |
2 |
| Adjusted EBITDA | 2,483 |
Segment Information
| North America Three months ended June 30, |
Europe | International Markets | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended June 30, | Three months ended June 30, | ||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||
| (U.S. \$ in millions) | (U.S. \$ in millions) | (U.S. \$ in millions) | |||||||||
| Revenues \$ | 1,943 | \$ | 2,047 | \$ | 1,184 | \$ | 1,001 | \$ | 485 | \$ | 488 |
| Gross profit | 1,040 | 1,090 | 661 | 548 | 270 | 247 | |||||
| R&D expenses | 162 | 154 | 63 | 65 | 18 | 19 | |||||
| S&M expenses | 255 | 254 | 209 | 188 | 105 | 105 | |||||
| G&A expenses | 106 | 110 | 47 | 52 | 25 | 29 | |||||
| Other income | (5) | (2) | § | (1) | (1) | (2) | |||||
| Segment profit \$ | 521 | \$ | 573 | \$ | 343 | \$ | 244 | \$ | 123 | \$ | 97 |
§ Represents an amount less than \$1 million.
| North America Six months ended June 30, |
Europe Six months ended June 30, |
International Markets | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Six months ended June 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||
| (U.S. \$ in millions) | (U.S. \$ in millions) | (U.S. \$ in millions) | |||||||||||
| Revenues \$ | 3,932 | \$ | 4,129 | \$ | 2,398 | \$ | 2,404 | \$ | 975 | \$ | 1,053 | ||
| Gross profit | 2,114 | 2,152 | 1,349 | 1,371 | 530 | 552 | |||||||
| R&D expenses | 322 | 300 | 129 | 120 | 35 | 34 | |||||||
| S&M expenses | 483 | 505 | 424 | 390 | 201 | 211 | |||||||
| G&A expenses | 218 | 228 | 117 | 118 | 51 | 63 | |||||||
| Other income | (7) | (4) | (1) | (2) | (3) | (8) | |||||||
| Segment profit \$ | 1,098 | \$ | 1,123 | \$ | 680 | \$ | 746 | \$ | 245 | \$ | 253 |
Segment Information
Reconciliation of our segment profit to consolidated income before income taxes
| Three months ended June 30, |
|||||
|---|---|---|---|---|---|
| 2021 | 2020 | ||||
| (U.S.\$ in millions) | |||||
| North America profit | \$ | 521 | \$ | 573 | |
| Europe profit | 343 | 244 | |||
| International Markets profit | 123 | 97 | |||
| Total reportable segment profit | 987 | 914 | |||
| Profit of other activities | 47 | 66 | |||
| 1,034 | 979 | ||||
| Amounts not allocated to segments: | |||||
| Amortization | 173 | 249 | |||
| Other asset impairments, restructuring and other items | 28 | 381 | |||
| Intangible asset impairments | 195 | 120 | |||
| Legal settlements and loss contingencies | 6 | 13 | |||
| Other unallocated amounts | 50 | 44 | |||
| Consolidated operating income (loss) | 582 | 173 | |||
| Financial expenses - net | 274 | 223 | |||
| Consolidated income (loss) before income taxes | \$ 308 |
\$ (51) |
Reconciliation of our segment profit to consolidated income before income taxes
| Six months ended | |||||
|---|---|---|---|---|---|
| June 30, | |||||
| 2021 | 2020 | ||||
| (U.S.\$ in millions) | |||||
| North America profit | \$ | 1,098 | \$ | 1,123 | |
| Europe profit | 680 | 746 | |||
| International Markets profit | 245 | 253 | |||
| Total reportable segment profit | 2,023 | 2,121 | |||
| Profit of other activities | 87 | 102 | |||
| Total segment profit | 2,111 | 2,223 | |||
| Amounts not allocated to segments: | |||||
| Amortization | 414 | 507 | |||
| Other asset impairments, restructuring and other items | 165 | 502 | |||
| Intangible asset impairments | 274 | 768 | |||
| Legal settlements and loss contingencies | 110 | (12) | |||
| Other unallocated amounts | 132 | 93 | |||
| Consolidated operating income (loss) | 1,015 | 364 | |||
| Financial expenses - net | 564 | 448 | |||
| Consolidated income (loss) before income taxes | \$ | 451 | \$ | (84) |
Segment revenues by major products and activities
(Unaudited)
| Three months ended | ||||||
|---|---|---|---|---|---|---|
| June 30, | Percentage Change |
|||||
| 2021 | 2020 | 2020-2021 | ||||
| (U.S.\$ in millions) | ||||||
| North America segment | ||||||
| Generic products | \$ | 951 | \$ | 923 | 3% | |
| AJOVY | 46 | 34 | 32% | |||
| AUSTEDO | 174 | 161 | 8% | |||
| BENDEKA/TREANDA | 106 | 103 | 3% | |||
| COPAXONE | 152 | 238 | (36%) | |||
| ProAir* | 55 | 66 | (16%) | |||
| Anda | 316 | 374 | (16%) | |||
| Other | 144 | 147 | (2%) | |||
| Total | 1,943 | 2,047 | (5%) |
* Does not include revenues from the ProAir authorized generic, which are included under generic products.
| Three months ended | Percentage Change |
|||
|---|---|---|---|---|
| June 30, | ||||
| 2021 | 2020 | 2020-2021 | ||
| (U.S.\$ in millions) | ||||
| Europe segment | ||||
| Generic products | \$ 878 |
\$ 737 |
19% | |
| AJOVY | 19 | 5 | 302% | |
| COPAXONE | 100 | 84 | 19% | |
| Respiratory products | 85 | 80 | 7% | |
| Other | 102 | 95 | 7% | |
| Total | 1,184 | 1,001 | 18% |
| Three months ended | Percentage Change |
||||
|---|---|---|---|---|---|
| June 30, | |||||
| 2021 | 2020 | 2020-2021 | |||
| (U.S.\$ in millions) | |||||
| International Markets segment | |||||
| Generic products | \$ | 407 | \$ | 426 | (5%) |
| COPAXONE | 7 | 12 | (35%) | ||
| Other | 71 | 50 | 42% | ||
| Total | 485 | 488 | (1%) |
Revenues by Activity and Geographical Area (Unaudited)
| Six months ended | ||||
|---|---|---|---|---|
| Percentage | ||||
| June 30, | Change | |||
| 2021 | 2020 | 2020-2021 | ||
| (U.S.\$ in millions) | ||||
| North America segment | ||||
| Generic products | \$ 2,004 |
\$ | 1,875 | 7% |
| AJOVY | 77 | 63 | 21% | |
| AUSTEDO | 320 | 283 | 13% | |
| BENDEKA / TREANDA | 197 | 208 | (6%) | |
| COPAXONE | 315 | 435 | (28%) | |
| ProAir* | 109 | 125 | (13%) | |
| Anda | 605 | 800 | (24%) | |
| Other | 305 | 338 | (10%) | |
| Total | 3,932 | 4,129 | (5%) |
* Does not include revenues from the ProAir authorized generic, which are included under generic products.
| Six months ended | Percentage Change |
|||
|---|---|---|---|---|
| June 30, | ||||
| 2020 2021 |
2020-2021 | |||
| (U.S.\$ in millions) | ||||
| Europe segment | ||||
| Generic products | \$ | 1,742 | \$ 1,769 |
(2%) |
| AJOVY | 35 | 9 | 277% | |
| COPAXONE | 201 | 193 | 4% | |
| Respiratory products | 179 | 186 | (4%) | |
| Other | 242 | 246 | (2%) | |
| Total | 2,398 | 2,404 | 0% |
| Six months ended June 30, |
Percentage Change |
||||
|---|---|---|---|---|---|
| 2021 | 2020 | 2020-2021 | |||
| (U.S.\$ in millions) | |||||
| International Markets segment | |||||
| Generic products | \$ | 799 | \$ | 875 | (9%) |
| COPAXONE | 19 | 23 | (18%) | ||
| Other | 157 | 154 | 2% | ||
| Total | 975 | 1,053 | (7%) |
Free cash flow reconciliation
(Unaudited)
| Three months ended June 30, | |||
|---|---|---|---|
| 2021 | 2020 | ||
| (U.S. \$ in millions) | |||
| Net cash provided by operating activities Beneficial interest collected in exchange for securitized accounts |
218 | 273 | |
| receivables | 405 | 401 | |
| Purchases of property, plant and equipment | (113) | (131) | |
| Proceeds from sale of business and long lived assets | 116 | 39 | |
| Free cash flow \$ | 625 | \$ 582 |
Free cash flow reconciliation
(Unaudited)
| Six months ended June 30, | |||||
|---|---|---|---|---|---|
| 2021 | 2020 | ||||
| (U.S. \$ in millions) | |||||
| Net cash provided by (used in) operating activities Beneficial interest collected in exchange for securitized accounts |
(187) | 578 | |||
| receivables | 881 | 769 | |||
| Purchases of property, plant and equipment | (263) | (259) | |||
| Proceeds from sale of business and long lived assets | 254 | 45 | |||
| Free cash flow \$ | 684 | \$ | 1,133 |