Executive Summary

Mixed headline vs. estimates: revenue missed while EPS/EBITDA beat. Q2 revenue was $4.18B vs. S&P Global consensus $4.27B (miss), Non-GAAP EPS $0.66 vs. $0.62 (beat), and Adjusted EBITDA $1.23B vs. $1.18B (beat). Drivers were strong innovative brands (AUSTEDO/AJOVY/UZEDY) and favorable mix; headwinds were U.S./International generics and COPAXONE declines . Estimates marked below with asterisks are from S&P Global.
Guidance: Raised 2025 EPS low-end to $2.50 (from $2.45) and increased 2025 sales outlooks for AUSTEDO ($2.00–$2.05B), AJOVY ($630–$640M), and UZEDY ($190–$200M); revenue, non-GAAP OI, EBITDA, FCF, tax rate reaffirmed .
Margin trajectory: Non-GAAP gross margin expanded to 54.6% (+170 bps YoY) and non-GAAP operating margin to 27.1% (+180 bps YoY), driven by mix (innovative growth, EU product-rights sales) and lower operating expenses as % of sales .
Strategic narrative/catalysts: Management reiterated path to 30% operating margin by 2027, ongoing ~$700M transformation savings with ~$70M to be realized in 2H25 (run-rate ~$140M), olanzapine LAI NDA filing expected Q4’25, and Phase 3 duvakitug (anti‑TL1A) initiations in UC/CD in Q4’25 .

What Went Well and What Went Wrong

What Went Well

Innovative portfolio acceleration: AUSTEDO $498M (+19% LC), AJOVY $155M (+31% LC), UZEDY $54M (+120% YoY), with raised 2025 outlooks; CEO: “our innovative portfolio… remains the primary engine driving our revenue growth” .
Margin expansion: Non-GAAP GM 54.6% (from 52.9%) on favorable mix and EU product rights sale; non-GAAP operating margin 27.1% (from 25.3%) .
Balance sheet actions: Debt reduced to $17.23B (from $17.78B YE24); refinanced ~$2.3B of maturities and repurchased $2.29B of notes; short-term debt cut to 3% of total; CFO cites leverage just over 3x and on track to 2x by 2027 .

What Went Wrong

Top-line miss vs. consensus and pressure in generics/COPAXONE: Revenues $4.18B vs. S&P $4.27B; global generics -2% LC YoY ex-Japan BV; COPAXONE declines persisted .
Higher legal/restructuring charges: $166M legal settlements (opioids accretion, generic antitrust provision) and $154M restructuring in Q2 inflated GAAP/adjustments; non-GAAP EPS excludes these .
International Markets down on Japan BV divestiture and timing: Segment revenues -17% YoY; AUSTEDO -76% and AJOVY -7% in IM on shipment timing .

Financial Results

Consolidated performance and margins (chronological: Q2’24 → Q1’25 → Q2’25)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($B)	$4.164	$3.891	$4.176
GAAP Diluted EPS	$(0.75)	$0.18	$0.24
Non-GAAP Diluted EPS	$0.61	$0.52	$0.66
Adjusted EBITDA ($B)	$1.168	$1.041	$1.233
Non-GAAP Gross Margin %	52.9%	52.8%	54.6%
Non-GAAP Operating Margin %	25.3%	24.3%	27.1%

Results vs. Wall Street (S&P Global) consensus

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($B)	$4.045 est / $4.164 act*	$3.988 est / $3.891 act*	$4.269 est / $4.176 act*
Non-GAAP EPS ($)	$0.551 est / $0.61 act*	$0.463 est / $0.52 act*	$0.615 est / $0.66 act*
EBITDA ($B)	$1.132 est / $1.076 act*	$1.018 est / $0.953 act*	$1.184 est / $1.145 act*

Values marked with * retrieved from S&P Global.

Q2’25: EPS beat, EBITDA beat, Revenue miss vs. S&P Global. Mix uplift (AUSTEDO, EU product-rights sale) and operating expense discipline drove EPS/EBITDA upside despite generics softness and COPAXONE pressure .

Segment revenue (US/Europe/International)

Segment Revenue ($M)	Q2 2024	Q2 2025	YoY Δ
United States	$2,110	$2,151	+2%
Europe	$1,213	$1,298	+7%
International Markets	$593	$495	-17%

Product & KPI highlights (Q2 2025)

KPI	Q2 2025
AUSTEDO Global Revenue	$498M; +19% LC YoY
AJOVY Global Revenue	$155M; +31% LC YoY
UZEDY U.S. Revenue	$54M; +120% YoY
U.S. Generics (incl. biosims)	$961M; -6% YoY
Cash from Operations	$227M
Free Cash Flow	$476M
Adjusted EBITDA	$1.233B
Non-GAAP Tax Rate	16.4%
Total Debt (6/30/25)	$17.227B

Guidance Changes

Metric	Period	Previous Guidance (May 2025)	Current Guidance (Jul 30, 2025)	Change
Revenues ($B, GAAP)	FY 2025	$16.8 – $17.2	$16.8 – $17.2	Maintained
Non‑GAAP Operating Income ($B)	FY 2025	$4.3 – $4.6	$4.3 – $4.6	Maintained
Adjusted EBITDA ($B)	FY 2025	$4.7 – $5.0	$4.7 – $5.0	Maintained
Non‑GAAP Diluted EPS ($)	FY 2025	$2.45 – $2.65	$2.50 – $2.65	Raised (low end +$0.05)
Free Cash Flow ($B)	FY 2025	$1.6 – $1.9	$1.6 – $1.9	Maintained
AUSTEDO Revenue ($M)	FY 2025	$1,950 – $2,050	$2,000 – $2,050	Raised (low end +$50M)
AJOVY Revenue ($M)	FY 2025	~600	630 – 640	Raised
UZEDY Revenue ($M)	FY 2025	~160	190 – 200	Raised
Tax Rate (Non-GAAP)	FY 2025	15% – 18%	15% – 18%	Maintained
Finance Expenses ($B)	FY 2025	~0.9	~0.9	Maintained
CAPEX ($B, GAAP)	FY 2025	~0.5	~0.5	Maintained

Management expects revenues around or slightly below the midpoint given softer generics; EPS/EBITDA expected at midpoint or above on innovative mix, transformation savings (~$70M 2H25), and FX benefits .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24)	Previous Mentions (Q1’25)	Current Period (Q2’25)	Trend
Pivot to Growth; 30% Op margin by 2027	Reiterated 30% 2027 target; path via innovative mix and ops programs	Reaffirmed; outlined 400 bps OP expansion plan 2026–27	“On track”; 27.1% non-GAAP OP in Q2; $700M net savings underway (~$70M in 2H25)	Improving
Innovative brands (AUSTEDO/AJOVY/UZEDY)	Strong FY’24 growth and 2025 targets	Q1 strength; AUSTEDO XR >60% new pts; outlook raised low-end	Q2 global growth +26% LC; all three outlooks raised	Improving
R&D execution (olanzapine LAI, DARI, duvakitug)	Phase 3/filing timelines set; TL1A phase 2b positive	On-track: olanzapine submission 2H25; DARI enrolling; TL1A P3 H2’25	Olanzapine NDA in Q4’25; TL1A P3 UC/CD starts Q4’25	On track
Generics & biosimilars	Growth across regions; pipeline of complex Gx and biosims	Q1 Gx growth across regions; portfolio play in biosims	Q2 Gx flat/soft; reiterated flat-to-low-single-digit FY; biosims momentum and multiple launches	Stable
Tariffs/supply chain	U.S./global footprint; limited China/India exposure	Absorbed confirmed U.S. tariffs in 2025 guidance; strong U.S. mfg	Monitoring EU developments; no meaningful near-term impact; >50% U.S. sales are U.S.-manufactured	Stable
IRA/Medicare Part D	AUSTEDO in CMS negotiation; planning for impact	IRA selection list noted; impact anticipated 2027	No specifics while negotiating; included in 2025 outlook; Part D redesign affects UZEDY/AUSTEDO dynamics	Watch
Legal/regulatory	2024 legal items (EU COPAXONE, opioids accruals)	—	Q2 legal settlements $166M (opioid accretion; generic antitrust)	Neutral

Management Commentary

CEO (Richard Francis): “Teva’s performance this quarter stands as a testament to the exceptional strength of our innovative portfolio… placing us firmly on track to achieve a 30% operating profit margin by 2027” .
CEO: “We raised the 2025 revenue outlook for AUSTEDO… AJOVY… and UZEDY” as the innovative portfolio collectively grew ~26% YoY in LC .
CFO (Eli Kalif): Non-GAAP GM up 130 bps YoY to 54.6% from positive mix (AUSTEDO) and EU product-rights sales; non-GAAP OP margin up ~170 bps to 27.1% .
CFO: Leverage just over 3x; on track to 2x by 2027; $2.3B refinancing and debt reduction executed .
CEO on transformation: Targeting ~$700M net savings by 2027; ~20% of two-thirds target already achieved, with ~$70M expected in 2H25 (run-rate ~$140M) .

Q&A Highlights

IRA/CMS negotiations (AUSTEDO): Management declined specifics during active talks; any impact modeled in guidance; Part D redesign acknowledged (UZEDY impacted immediately, AUSTEDO phased) .
Tariffs: Flexible global supply chain, significant U.S. footprint (>50% of U.S. sales made in U.S.) and limited China/India sourcing; no meaningful near-term impact expected .
Generics cadence (Revlimid/Victoza): U.S. generics underlying growth ex-Revlimid/Victoza; Revlimid order phasing introduced volatility Q2 and likely Q4; full-year Gx flat-to-low single digit .
Gross margin outlook: Expect FY GM at or above midpoint of 53–54%, trending higher into Q4; innovative mix and initial savings offset generics softness .
TAPI/API divestiture: Process active and advanced; focus on best outcome; API business classified as held for sale .

Estimates Context

Q2’25 vs S&P Global: Revenue $4.176B vs $4.269B est (miss); Non‑GAAP EPS $0.66 vs $0.615 est (beat); EBITDA $1.233B vs $1.184B est (beat). Consensus count: 7 estimates for revenue/EPS [GetEstimates].
Q1’25 and Q2’24 also reflected beats on EPS vs consensus despite revenue headwinds in certain periods [GetEstimates].

Values retrieved from S&P Global.

Key Takeaways for Investors

Innovative engine is now the stock narrative: double-digit LC growth in AUSTEDO/AJOVY/UZEDY with raised 2025 targets; mix is structurally expanding GM/OP margins—supports multiple expansion if execution sustains .
2025 guide quality improved: EPS low-end raised despite generics softness and IRA/tariff uncertainties; management guiding to midpoint-or-better for EPS/EBITDA on mix and savings .
Near-term watch items: Revlimid phasing (Q3/Q4), Part D redesign headwinds, and tariff specificity; management claims mitigation plans and limited China exposure .
Medium-term catalysts: Olanzapine LAI NDA filing (Q4’25) with 2026 approval targeted; duvakitug Phase 3 initiations (UC/CD) in Q4’25; DARI Phase 3 progressing—optionality for 2027+ growth .
Deleveraging and capital allocation discipline underpin equity story: refinancing done at similar cost of capital; leverage just over 3x, 2x goal by 2027; potential for future capital returns post-investment-grade .
Transformation program should support 30% OP margin by 2027: ~$700M net savings, site/footprint optimization, procurement efficiencies; early savings to show in 2H25 .

Appendix: Additional Detail

Q2 Cash & FCF: CFFO $227M, FCF $476M; debt $17.23B; average maturity ~5.95 years; short-term debt 3% .
Non-GAAP adjustments Q2: $486M, including $166M legal settlements (opioid accretion; generic antitrust), $154M restructuring, $99M asset impairments .

TEVA PHARMACEUTICAL INDUSTRIES LTD (TEVA)·Q2 2025 Earnings Summary