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TEVA PHARMACEUTICAL INDUSTRIES LTD (TEVA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $4.229B; GAAP EPS was $(0.19) and non-GAAP EPS was $0.71. Adjusted EBITDA was $1.282B and non-GAAP operating margin was 27.6% .
  • Versus Q4 2023, revenue declined due to the $500M Sanofi upfront payment in Q4 2023; excluding that, management cited underlying growth driven by AUSTEDO, UZEDY, AJOVY, generics, and sale of product rights .
  • FY 2025 outlook introduced: revenues $16.8–$17.4B, non-GAAP operating income $4.1–$4.6B, adjusted EBITDA $4.5–$5.0B, EPS $2.35–$2.65, FCF $1.6–$1.9B; finance expenses ~$900M; tax rate 15–18%; capex ~$0.5B .
  • Strategic catalysts: continued AUSTEDO growth (2024 revenues >$1.6B), UZEDY momentum ($117M FY 2024), AJOVY ($507M FY 2024), plus duvakitug (anti‑TL1A) Phase 3 start in 2025; biosimilars launches (SELARSDI expected Q1 2025) .

What Went Well and What Went Wrong

What Went Well

  • AUSTEDO exceeded $1.6B in 2024 and grew 27% in Q4 US to $518M, supported by strong TRx growth and expanded access .
  • Generics strength across regions; International Markets Q4 revenue rose 10% (local currency +17%) with improved gross margin (52.3%) and segment profit up 30% .
  • Pipeline/innovation milestones: positive Phase 2b duvakitug results; olanzapine LAI Phase 3 safety achieved with no PDSS; DARI ICS/SABA Phase 3 progressing (91% sites active) .
  • Quote: “2024 marked a transformative year… driven by our generic products and key innovative products… Pivot to Growth strategy” — Richard Francis, CEO .

What Went Wrong

  • YoY Q4 margins compressed: GAAP gross margin 50.1% vs 54.2% in Q4 2023; non-GAAP GM 54.8% vs 58.2%, largely due to the prior-year $500M Sanofi upfront and lower COPAXONE .
  • US segment profit fell 42% YoY on absence of Sanofi upfront; US gross margin declined to 55.6% (63.7% prior-year) .
  • FX headwinds: 2024 revenue impact −$257M; Q4 revenue impact −$8M; FY gross profit impact −$187M; CFO expects FX to remain a headwind in 2025 .
  • Continued legal/impairment charges (COPAXONE EC fine; impairments tied to API/Japan venture held-for-sale) pressured GAAP results .

Financial Results

Sequential Trends (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$4.164 $4.332 $4.229
GAAP EPS ($)$(0.75) $(0.39) $(0.19)
Non-GAAP Diluted EPS ($)$0.61 $0.69 $0.71
Gross Profit ($USD Millions)$2,024 $2,148 $2,120
Gross Profit Margin (%)48.6% 49.6% 50.1%
Non-GAAP Operating Income ($USD Millions)$1,056 $1,214 $1,168
Non-GAAP Operating Margin (%)25.3% 28.0% 27.6%
Adjusted EBITDA ($USD Millions)$1,168 $1,327 $1,282
Cash Flow from Operations ($USD Millions)$103 $693 $575
Free Cash Flow ($USD Millions)$324 $922 $790

Notes: CFO highlighted that excluding the Q4 2023 $500M upfront, Q4 2024 showed ~7% underlying revenue growth; non-GAAP EPS rose to $0.71 and margins remained strong despite FX headwinds .

Year-over-Year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$4.457 $4.229
GAAP Diluted EPS ($)$0.41 $(0.19)
Non-GAAP Diluted EPS ($)$1.00 $0.71
Gross Profit ($USD Millions)$2,416 $2,120
Gross Profit Margin (%)54.2% 50.1%
Non-GAAP Operating Income ($USD Millions)$1,546 $1,168
Non-GAAP Operating Margin (%)34.7% 27.6%
Adjusted EBITDA ($USD Millions)$1,660 $1,282
Cash Flow from Operations ($USD Millions)$1,184 $575
Free Cash Flow ($USD Millions)$1,486 $790

Drivers: Year-over-year comparisons reflect the absence of the Q4 2023 $500M Sanofi upfront payment and lower COPAXONE, partially offset by AUSTEDO/UZEDY/AJOVY growth and sale of product rights .

Segment Revenues (Q4 2023 → Q4 2024)

SegmentQ4 2023 ($MM)Q4 2024 ($MM)
United States$2,266 $1,975
Europe$1,344 $1,353
International Markets$601 $661

Key Product KPIs (Q4 2023 → Q4 2024 by segment)

ProductSegmentQ4 2023 ($MM)Q4 2024 ($MM)
AUSTEDOUnited States$408 $518
AUSTEDOInternational$5 $7
AJOVYUnited States$57 $63
AJOVYEurope$45 $58
AJOVYInternational$19 $22
UZEDYUnited States$9 $43
COPAXONEUnited States$72 $63
COPAXONEEurope$56 $50
COPAXONEInternational$12 $9
Anda (distribution)United States$394 $402

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2024$16.0–$16.4B (Jul-2024) $16.1–$16.5B (Nov-2024) Raised
Adjusted EBITDAFY 2024$4.6–$5.0B (Jul-2024) $4.7–$5.0B (Nov-2024) Raised
Non-GAAP Diluted EPSFY 2024$2.30–$2.50 (Jul-2024) $2.40–$2.50 (Nov-2024) Raised
UZEDY RevenueFY 2024~$80M (Jul-2024) ~$100M (Nov-2024) Raised
COPAXONE RevenueFY 2024~$450M (Jul-2024) ~$500M (Nov-2024) Raised
Finance ExpensesFY 2024~$1,000M (Jul-2024) ~$1,000M (Nov-2024) Maintained
Tax RateFY 202414–17% (Jul-2024) 14–17% (Nov-2024) Maintained

Initial FY 2025 Outlook (introduced in Q4 2024):

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2025N/A$16.8–$17.4B New
Non-GAAP Operating IncomeFY 2025N/A$4.1–$4.6B New
Adjusted EBITDAFY 2025N/A$4.5–$5.0B New
Non-GAAP Diluted EPSFY 2025N/A$2.35–$2.65 New
Free Cash FlowFY 2025N/A$1.6–$1.9B New
Finance ExpensesFY 2025N/A~$900M New
Tax RateFY 2025N/A15–18% New
CAPEXFY 2025N/A~$0.5B New

Assumptions: FY25 outlook assumes full-year contribution from Teva API and Japan BV (held-for-sale), excludes potential Sanofi milestones for Phase 3 initiation of duvakitug .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3 2024)Current Period (Q4 2024)Trend
AUSTEDO growthQ2: US $407M (+32% YoY); guidance raised to ~$1.6B . Q3: US $435M (+28% YoY); reaffirm ~$1.6B .US $518M in Q4 (+27% YoY); FY 2024 >$1.6B; FY25 guidance $1.9–$2.05B .Accelerating
UZEDY rampQ2: early commercialization; FY24 outlook ~$80M . Q3: US $35M; raised FY24 to ~$100M .US $43M; FY 2024 $117M; FY25 ~ $160M; Part D redesign headwind acknowledged .Positive with policy headwinds
AJOVY performanceQ2 global $115M (+12% LC); Europe +33% . Q3 global $137M (+21% LC) .Q4 segment revenues: US $63M (+11%), EU $58M (+28%), INT $22M (+16%); FY 2024 $507M, FY25 ~ $600M .Broad-based share gains
Generics/RevlimidQ2/Q3: US generics rose 16%/30%; Q3 noted Revlimid contribution .Q4 US generics +1%; mgmt cited Revlimid seasonality (Q2/Q3 weighted) .Strong year, Q4 timing
FXQ2/Q3: material FX headwinds to revenue/margins .FY 2024 revenue −$257M; CFO flags ongoing FX risk into 2025 .Persistent headwind
Legal/taxQ2: ITA tax settlement ($495M); legal provisions . Q3: COPAXONE EC fine provision .Q4: COPAXONE EC decision costs; non-GAAP tax rate 14.8% .Headwinds fading over time
API/Japan divestitureQ2: intent to divest API; H1 2025 target . Q3: on track .Q4: API classified held-for-sale; Japan BV sale expected closing Apr 1, 2025 .Execution progressing
Pipeline (duvakitug, olanzapine, DARI)Q2: duvakitug top-line in Q4; olanzapine Phase 3 target injections achieved; DARI Phase 3 enrolling . Q3: reiterated timelines .Q4: positive Phase 2b duvakitug; Phase 3 start in 2025; olanzapine full safety in Q2 2025; DARI Phase 3 event-driven enrolling .Advancing to pivotal

Management Commentary

  • “We continued to achieve important milestones in each of [Pivot to Growth]’s four pillars, including surpassing the outlook for our key innovative products, growing our generics business across all segments, and accelerating our early-stage innovative pipeline… These results pave the way for pivotal trials in Crohn’s disease and ulcerative colitis…” — Richard Francis, CEO .
  • CFO on Q4 comps: “Excluding the Sanofi payment, revenue increased 7%… Non‑GAAP EPS was $0.71… we saw gradual and sustainable improvement in our gross profit margin despite significant FX headwinds” .
  • R&D head: “Duvakitug… shows the highest reported treatment effects for this MOA… We’re very excited to present late-breakers for UC and CD at ECCO and move to Phase 3 in 2025” — Eric Hughes .
  • Strategy: “All regions are growing… biosimilars portfolio now 18 assets with 7 US and 4 EU launches planned through 2026… we remain focused on capital allocation to drive short and long-term growth” — Richard Francis .

Q&A Highlights

  • EBITDA trajectory and TL1A investment: OpEx will be shared 50/50 with Sanofi; mgmt aims to grow EBITDA while investing in growth engines and pipeline; IRA will pressure AUSTEDO/UZEDY economics .
  • API divestiture: API classified as held-for-sale; goodwill/intangible impairments reflect that process; trajectory unchanged; Japan BV closing targeted for April 1, 2025 .
  • UZEDY FY25 outlook: ~$160M reflects Medicare Part D redesign headwind starting Jan 1; prescriptions expected to grow despite reimbursement changes .
  • Revlimid “cliff” in 2026: Mitigation via 16 complex generics (2025–26), multiple biosimilars, and acceleration of the innovative portfolio (AUSTEDO, AJOVY, UZEDY; new launches olanzapine LAI in 2026, DARI thereafter) .
  • Free cash flow: FY25 guide lower due to deliberate reduction in receivables securitization ($100–$200M impact) and higher legacy legal outflows; normalization expected beyond 2025 .
  • Margin path to 30% by 2027: Mix shift to innovative portfolio and tech ops efficiency programs; mgmt targets gross margin rising to 56–57% by 2027 (non-linear path) .

Estimates Context

  • S&P Global consensus data was unavailable at the time of request due to provider limits; therefore, comparisons to Wall Street estimates cannot be provided. Management reported Q4 non-GAAP EPS of $0.71 and highlighted underlying revenue growth excluding the prior-year upfront payment .

Key Takeaways for Investors

  • AUSTEDO remains the key growth engine with durable runway; FY25 guidance of $1.9–$2.05B underscores confidence despite IRA headwinds .
  • UZEDY is scaling with formulary dynamics; expect mix/allowance impacts from Part D redesign but sustained prescription growth .
  • AJOVY continues to gain share across regions; combined segment data point to broad-based expansion in Q4 .
  • Generics performance remains solid; anticipate Q4 variability due to Revlimid seasonality, with strength concentrated in Q2–Q3 .
  • 2025 outlook implies stable margins and disciplined OpEx to fund pipeline; FX remains a risk factor to monitor into 2025 .
  • Structural legal/tax headwinds are being addressed; deleveraging progresses with net debt/EBITDA ~3x and ratings outlook upgrades .
  • Near-term catalysts: SELARSDI US launch in Q1 2025; duvakitug Phase 3 initiation; olanzapine LAI NDA submission in 2H 2025 .