Executive Summary

TEVA delivered its 11th consecutive quarter of growth: revenue $4.48B (+3% YoY; +5% ex-Japan BV), non-GAAP EPS $0.78, and adjusted EBITDA $1.39B, with non-GAAP operating margin up 86 bps YoY to 28.9% .
Broad beats versus S&P consensus: revenue $4.48B vs $4.33B*, non-GAAP EPS $0.78 vs $0.67*, and EBITDA $1.39B vs $1.24B*; strength driven by AUSTEDO (+38% YoY U.S.), AJOVY (+19% LC YoY), and UZEDY (+24% YoY) .
Guidance raised/tightened: FY25 AUSTEDO $2.05–$2.15B (up $50–$100M), non-GAAP EPS $2.55–$2.65 (low-end +$0.05), operating income and EBITDA ranges increased at the low end; total revenue range narrowed to $16.8–$17.0B .
Strategic catalysts: CMS IRA price-setting concluded in line with TEVA’s expectations, reinforcing AUSTEDO 2027 revenue target >$2.5B and peak >$3B; TEVA will restart TAPI sale process after terminating exclusive discussions .
Near-term modeling item: management expects a Q4 development milestone from the Sanofi duvakitug Phase 3 initiation (~$250M revenue, ~$0.40 EPS contribution), which is excluded from current guidance .

Values with asterisks (*) are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Innovative brands drove growth and mix improvement: “our key growth drivers—particularly our innovative medicines—delivered a 33% increase in local currency,” lifting non-GAAP gross margin to 55.3% (+120 bps YoY) .
AUSTEDO momentum and IRA clarity: U.S. revenue hit $601M (+38% YoY), FY25 outlook raised to $2.05–$2.15B; management reiterated 2027 target >$2.5B and peak >$3B following IRA negotiations .
Margin trajectory intact under Pivot to Growth: non-GAAP operating margin 28.9% in Q3 (on track for 30% by 2027), aided by transformation savings and mix shift to high-margin innovation .

What Went Wrong

Europe softness: segment revenue down 2% YoY (–10% LC) and segment profit down 19%, reflecting lower generic volumes, price reductions, and fewer proceeds from product-rights sales vs. prior-year comps .
Free cash flow declined YoY: $515M vs $922M in Q3’24, driven by timing of sales/collections and higher legal settlement payments (within plan) .
International Markets down 9% (–10% LC) YoY, primarily from the Japan BV divestiture; segment profit decreased to $95M from $109M .

Financial Results

Headline Metrics – Last Three Quarters

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$3.89	$4.18	$4.48
GAAP Diluted EPS ($)	$0.18	$0.24	$0.37
Non-GAAP Diluted EPS ($)	$0.52	$0.66	$0.78
Adjusted EBITDA ($USD Billions)	$1.04	$1.23	$1.39
GAAP Operating Margin %	13.3%	10.9%	19.7%
Non-GAAP Operating Margin %	24.3%	27.1%	28.9%
Gross Profit Margin %	48.2%	50.3%	51.4%
Non-GAAP Gross Profit Margin %	52.8%	54.6%	55.3%

YoY Comparison – Q3 2025 vs Q3 2024

Metric	Q3 2024	Q3 2025
Revenue ($USD Billions)	$4.33	$4.48
GAAP Diluted EPS ($)	$(0.39)	$0.37
Non-GAAP Diluted EPS ($)	$0.69	$0.78
Adjusted EBITDA ($USD Billions)	$1.33	$1.39
GAAP Operating Margin %	(1.2%)	19.7%
Non-GAAP Operating Margin %	28.0%	28.9%
Gross Profit Margin %	49.6%	51.4%
Non-GAAP Gross Profit Margin %	53.7%	55.3%

Segment Breakdown – Q3 2024 vs Q3 2025

Segment	Revenue Q3 2024 ($USD Millions)	Revenue Q3 2025 ($USD Millions)	Segment Profit Q3 2024 ($USD Millions)	Segment Profit Q3 2025 ($USD Millions)
United States	$2,225	$2,483	$748	$937
Europe	$1,265	$1,235	$373	$303
International Markets	$613	$557	$109	$95

U.S. Major Products – Q3 2024 vs Q3 2025

Product	Q3 2024 ($USD Millions)	Q3 2025 ($USD Millions)
Generic products (incl. biosimilars)	$1,094	$1,175
AJOVY	$58	$73
AUSTEDO	$435	$601
BENDEKA/TREANDA	$40	$35
COPAXONE	$69	$62
UZEDY	$35	$43
Anda	$380	$392
Other	$115	$101

KPIs – Cash, Debt, and FCF (Q1–Q3 2025)

Metric	Q1 2025	Q2 2025	Q3 2025
Cash from Operations ($USD Millions)	$(105)	$227	$369
Free Cash Flow ($USD Millions)	$107	$476	$515
Total Debt ($USD Millions)	$16,651	$17,227	$16,790
Cash and Equivalents ($USD Millions)	$1,697	$2,161	$2,203

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$16.8–$17.2B	$16.8–$17.0B	Tightened high-end by $0.2B
Non-GAAP Operating Income	FY 2025	$4.3–$4.6B	$4.4–$4.6B	Raised low-end +$0.1B; mid-point +$0.05B
Adjusted EBITDA	FY 2025	$4.7–$5.0B	$4.8–$5.0B	Raised low-end +$0.1B; mid-point +$0.05B
Non-GAAP Diluted EPS	FY 2025	$2.50–$2.65	$2.55–$2.65	Raised low-end +$0.05; mid-point +$0.025
Free Cash Flow	FY 2025	$1.6–$1.9B	$1.6–$1.9B	Maintained
Tax Rate (Non-GAAP)	FY 2025	15%–18%	15%–18%	Maintained
Finance Expenses	FY 2025	~$0.9B	~$0.9B	Maintained
CAPEX	FY 2025	~$0.5B	~$0.5B	Maintained
AUSTEDO Revenue	FY 2025	$2.00–$2.05B	$2.05–$2.15B	Raised +$50–$100M
AJOVY Revenue	FY 2025	$630–$640M	$630–$640M	Maintained
UZEDY Revenue	FY 2025	$190–$200M	$190–$200M	Maintained
COPAXONE Revenue	FY 2025	~$370M	~$370M	Maintained

Note: Management guided that a duvakitug Phase 3 milestone (~$250M revenue, ~$0.40 EPS) is expected in Q4 2025 but excluded from outlook ranges .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
IRA price-setting (AUSTEDO)	CMS listed AUSTEDO/AUSTEDO XR for price setting; impact uncertain in early stages	Agreement concluded; in line with TEVA’s modeling; reiterates 2027 >$2.5B and peak >$3B targets	Improving clarity
Innovative pipeline	Planned NDA filing for olanzapine LAI; DARI Phase 3 enrollment by YE; duvakitug Phase 3 initiations in H2/Q4	Olanzapine LAI NDA in Q4; DARI enrollment on track; duvakitug Phase 3 initiated; emrusolmin fast track	Advancing
Generics & biosimilars	Stable generics; biosimilars growth and launches; Europe benefitted from product-rights sales	U.S. generics +7%; Europe generics +1% but LC down; strong biosimilar growth continuing	Mixed (U.S. up, Europe soft)
TAPI divestiture	Intention to divest; engaged with buyers	Exclusive talks terminated; renewed sale process initiated	Rebaselined process
Tariffs/macro (OBBBA/232)	Outlook absorbed confirmed tariffs; macro/regulatory risks noted	Awaiting 232 outcome; management sees possible generics exemptions; guidance reflects confirmed tariffs	Monitor risk
UZEDY commercialization	Strong growth and FY guide raised in Q2	Medicaid gross-net adjustment impacted Q3; Q4 implied $55–$65M run-rate for modeling	Stabilizing post-adjustment

Management Commentary

CEO: “Our innovative portfolio driving the 11th consecutive quarter of growth… we remain firmly on track to reach our 30% non-GAAP operating profit margin by 2027 and ~$700 million of net savings target.”
CEO on IRA: “Following the conclusion of the IRA pricing negotiations, we are reiterating our strong confidence in our AUSTEDO 2027 target… >$2.5 billion and peak >$3 billion.”
CFO: “We continued to strengthen our balance sheet… net debt to EBITDA of below three times for the first time since Q3 2016,” and tightened FY guidance ranges in line with YTD performance .
R&D Head: Olanzapine LAI submission planned for late Q4; DARI Phase 3 enrollment on track by year-end; duvakitug Phase 3 UC/CD initiated with patient-friendly SC regimens .

Q&A Highlights

AUSTEDO and IRA impact: Management reiterated IRA outcome consistent with internal modeling; avoided price specifics; emphasized underdiagnosis of tardive dyskinesia (85% untreated) as growth driver .
OpEx trajectory: TEVA expects OpEx at 27–28% of revenue run-rate as transformation savings (two-thirds by end-2026) largely flow through OpEx .
Europe generics dynamics: Q3 softness tied to tough comps (prior launches/tender wins) and fading supply issues at competitors; generics CAGR framework ~2% remains, with EU biosimilars pipeline building post-2027 .
TAPI divestiture: Process reset due to terms misalignment; renewed sale process reflects shifting geopolitics and market attractiveness; TEVA seeks contracts that protect its API supply .
UZEDY modeling: One-time Medicaid gross-net adjustment in Q3; Q4 implied $55–$65M revenue provides cleaner run-rate .

Estimates Context

Metric	Q3 2025 Actual	Q3 2025 Consensus*	Surprise	Q4 2025 Consensus*
Revenue ($USD Billions)	$4.48	$4.33*	Beat	$4.40*
EPS (Primary) ($)	$0.78	$0.67*	Beat	$0.66*
Adjusted EBITDA ($USD Billions)	$1.39	$1.24*	Beat	$1.29*

Values marked with * retrieved from S&P Global.

Implications: TEVA’s broad-based beats on revenue, EPS, and EBITDA reflect superior execution in innovation and improved margins; consensus likely to adjust upward for FY EPS and operating metrics, with modelers incorporating the Q4 duvakitug milestone that management flagged (excluded from guidance) .

Key Takeaways for Investors

Innovation-led growth is accelerating: AUSTEDO ($601M U.S. in Q3), AJOVY (+19% LC YoY), UZEDY (+24% YoY) drove margin expansion; non-GAAP operating margin reached 28.9% .
Clear beats and guidance raise: TEVA beat consensus on revenue/EPS/EBITDA and lifted FY ranges (EPS, operating income, EBITDA) while tightening revenue; narrative supports upward estimate revisions .
IRA overhang reduced: CMS agreement aligns with TEVA’s model, underpinning AUSTEDO 2027 and peak targets; helps de-risk medium-term thesis .
Watch near-term catalysts: Q4 duvakitug milestone (~~$250M revenue/~~$0.40 EPS) excluded from guidance; likely a positive swing factor in reported Q4 .
Europe remains a watchpoint: segment profit down on pricing/volume and lack of prior-year product-rights sales; monitor LC trends and biosimilars uptake .
Balance sheet strength: total debt down to $16.79B; net debt/EBITDA <3x; deleveraging trajectory supports optionality for shareholder returns over time .
Strategic focus intact: transformation savings (~$700M by 2027) and TAPI sale process restart align capital toward innovation growth engines .

TEVA PHARMACEUTICAL INDUSTRIES LTD (TEVA)·Q3 2025 Earnings Summary