Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q2 2016 Earnings Presentation
42 slides from Teva Pharmaceutical Industries's earnings presentation, Aug 4, 2016
Slide 1: Second Quarter 2016 Results
Teva Pharmaceutical Industries Second Quarter 2016 Results August 4, 2016
Slide 2: Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995
Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements, which are based on management’s current beliefs and expectations and involve a number of known and unknown risks and uncertainties that could cause our future
Slide 3: Erez Vigodman, President & CEO
Erez Vigodman President & CEO
Slide 4: H1 2016 Key Achievements
H1 2016 Key Achievements Closed the Actavis Generics deal; extremely successful equity and debt financing Closed the Teva-Takeda JV (Japan) and Rimsa (Mexico) deals Announced the acquisition of Anda Received a favorable district court ruling on the Treanda® IP litigation Achieved key clinical and co
Slide 5: H1 2016 Financial Performance
H1 2016 Financial Performance H1 2016 Non- H1 2015 Non- $ million, except EPS Change GAAP GAAP Revenues 9,848 9,948 (1%) Operating Income 3,109 3,143 (1%) (31.6%) (31.6%) EBITDA 3,328 3,362 (1%) Net Income 2,400 2,395 -- EPS 2.45 N/A (981M shares) EPS adjusted to exclude the impact of the 2.78 2.79
Slide 6: H1 2016 Revenues Bridge
H1 2016 Revenues Bridge Strong manifestation of Teva’s balanced business model: Solid performance YoY even w/o major Gx launches $ million -247 402 -727 472 9,948 9,848 H1-15 FX Aripiprazole, Generics & Specialty H1-16 esomeprazole, OTC budesonide All data, except FX, are net of the impact of foreig
Slide 7: Teva + Actavis Generics Deal Closed
Teva + Actavis Generics Deal Closed A compelling transaction in one of the most attractive industries globally STRONG STRATEGIC FIT COMPELLING ECONOMICS Transform the generics space by Highly synergistic transaction: $1.4b in combining two of the industry’s best cost synergies and tax savings by
Slide 8: Successful Bond Offering To Finance The Actavis Generics Deal
Successful Bond Offering To Finance The Actavis Generics Deal Strong Demand Strong Trust in Teva Demand was multiple times Bonds’ rating is BBB, but the rates the size of the offering are A- equivalent $20.4 billion in three currencies across 14 trenches ranging from 2-30 years Blended rate ~2.17% U
Slide 9: Teva to Acquire Anda
Teva to Acquire Anda A Natural Fit Into Teva’s Business Model • 4th largest distributor of generics in the U.S. • Purchases and distributes products from 350+ manufacturers, to 60,000 accounts+ • Shipping to more than 85% of the pharmacies in the U.S. • Premier distributor for new to market launches
Slide 10: We Are Building a New Teva
We Are Building a New Teva Continue the transformation of our business Promising specialty model pipeline Diversified net revenues and profit streams Significantly enhanced Solidified foundation financial profile unlocking value from existing assets 10
Slide 11: Copaxone Litigation Summary
Copaxone Litigation Summary Five Orange Book patents covering 40mg glatiramer acetate (‘250, ‘413, ‘302, ‘776, ‘874) Generics filers pursuing two parallel pathways to challenge the patents: Patent trial and appeal board (PTAB) U.S. District Court in Delaware Any generic launch prior to a f
Slide 12: Copaxone Litigation Estimated Timeline
Copaxone Litigation Estimated Timeline Est. IPR Appeal Decision Last Day for IPR Decision Aug 25 '16 PTAB Last Day for PGR Decision Last Day for PGR Institution Decision Est. PGR Aug 24 '16 (if instituted) Aug 24 '17 Appeal Decision Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2018 Est. District Court US Dist
Slide 13: Specialty Pipeline Update
Specialty Pipeline Update Upcoming Key Milestones in Q3 2016 MS, Movement Disorders Pain Respiratory and Neurodegeneration SD-809 for Huntington Disease (HD) Vantrela® ER (Hydrocodone CEP-38072 (Reslizumab–IV) Full response to the CRL is targeted for end ER) For severe eosinophilic asthma – Septembe
Slide 14: Priorities for the Remainder of 2016
Priorities for the Remainder of 2016 Strong focus on Specialty Selective BD Business Updates execution medicines deals Integration and Achieve the key Mainly in specialty • September: Generic extraction of synergies milestones in our assets in our core TAs, medicines business while delivering on our
Slide 15: Eyal Desheh, EVP, Chief Financial Officer
Eyal Desheh EVP, Chief Financial Officer
Slide 16: Q2 2016 Results
Q2 2016 Results
Slide 17: Q2 2016 Non-GAAP P&L Highlights
Q2 2016 Non-GAAP P&L Highlights $ million, except EPS Q2 2016 Q2 2015 Change Q2 Outlook (July) Revenues 5,038 4,966 +1% 4.9-5.0 Operating Income 1,583 1,610 (2%) (31.4%) (32.4%) EBITDA 1,694 1,719 (1%) Net Income 1,228 1,230 - attributable to Teva EPS 1.25 1.19-1.22 (979M shares) (980M shares) EPS a
Slide 18: Q2 2016 GAAP P&L Highlights
Q2 2016 GAAP P&L Highlights $ million, except EPS Q2 2016 Q2 2015 Change Revenues 5,038 4,966 +1% Operating Income 361 662 (45%) (7.2%) (13.3%) Net Income 254 539 (53%) EPS 0.20 0.63 (68%) (920M shares) (859M shares) Non-GAAP adjustments for the quarter were $974 million, mainly adjustments of $546
Slide 19: Cash Flow Trends
Cash Flow Trends $ billion Cash From 1.5 1.1 1.6 1.4 1.0 Operations 246 144 171 111 Asset Purchase, Net 167 Free Cash Flow 1,336 1,369 1,205 982 796 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 19
Slide 20: Liquidity Trends
Liquidity Trends $ billion 10.9 9.9 10.2 Debt 12.5 11.7 Equity 29.9 30.6 32.0 23.1 22.9 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Leverage 35% 34% 25% 25% 25% Debt/EBITDA 1.90 1.76 1.50 1.54 1.66 20
Slide 21: EBITDA
EBITDA $ million 1,644 1,719 1,661 1,597 1,634 1,694 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 EBITDA is based on non-GAAP operating income, which excludes amortization and certain other items, and excluding depreciation expenses for the period 21
Slide 22: Quarterly Revenues
Quarterly Revenues $ million 186 -141 -359 387 4,966 5,039 Q2-15 FX Aripiprazole, Generics & Specialty Q2-16 esomeprazole, OTC budesonide All data, except FX, are net of the impact of foreign exchange fluctuations. 22
Slide 23: Quarterly Revenue Breakdown by Region
Quarterly Revenue Breakdown by Region $ million 4,966 5,038 814 (17%) 1,132 (22%) 1,200 (24%) ROW 1,239 (25%) Europe US 2,952 (59%) 2,667 (53%) Q2-15 Q2-16 23
Slide 24: Quarterly Revenue Breakdown by Business Lines
Quarterly Revenue Breakdown by Business Lines $ million 4,966 5,038 410 (8%) 473 (9%) 1,036 (21%) OTC and Other 1,130 (22%) Specialty MS Specialty 1,054 (21%) 1,141 (23%) Generics 2,466 (50%) 2,294 (46%) Q2-15 Q2-16 24
Slide 25: Quarterly Operating Profit
Quarterly Operating Profit $ million -52 122 -281 184 1,610 1,583 Q2-15 FX Aripiprazole, Generics & Specialty Q2-16 esomeprazole OTC , budesonide Operating Profit is presented on a non-GAAP basis. Segment and business line profit consists of gross profit, less S&M and R&D expenses related to the seg
Slide 26: Quarterly Business Line Profit
Quarterly Business Line Profit $ million 1,916 1,882 56 (3%) 13 (1%) OTC and Other 292 (15%) 327 (17%) Specialty MS Specialty Generics 839 (44%) 928 (49%) 729 (38%) 614 (33%) Q2-15 Q2-16 Segment and business line profit consists of gross profit, less S&M and R&D expenses related to the segment or bu
Slide 27: Generics Segment Gross Profit and Profit Margin Evolution
Generics Segment Gross Profit and Profit* Margin Evolution 48.6% Gross Profit 46.7% 45.6% 46.0% Margin 44.8% 29.6% Profit Margin 26.2% 26.9% 26.8% 25.5% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 * Segment profit consists of gross profit, less S&M and R&D expenses related to the segment. Segment profit does not
Slide 28: Copaxone revenues and US market shares
Copaxone® revenues and US market shares $ million 1,200 1,054 1,085 960 1,006 1,141 35% 186 30% 1,000 207 184 185 200 25% 800 20% 600 15% 955 870 878 821 400 760 10% 200 5% 0 0% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 US Ex-US US TRx MS* Copaxone® family US TRx MS* Copaxone® 40mg • Market share data is from I
Slide 29: First Half 2016 Results
First Half 2016 Results
Slide 30: H1 2016 P&L Highlights
H1 2016 P&L Highlights H1 2016 H1 2015 H1 2016 H1 2015 $ million, except EPS Change Change Non-GAAP Non-GAAP GAAP GAAP Revenues 9,848 9,948 (1%) 9,848 9,948 (1%) Operating Income 3,109 3,143 (1%) 1,526 1,411 8% (31.6%) (31.6%) (15.5%) (14.2%) EBITDA 3,328 3,362 (1%) 2,127 2,066 3% Net Income 2,400 2
Slide 31: First Half 2016 Revenue Breakdown by Business Lines
First Half 2016 Revenue Breakdown by Business Lines $ million 9,948 9,848 815 (8%) 961 (10%) 1,978 (20%) OTC & Other 2,147 (22%) MS Specialty Specialty 2,068 (21%) 2,276 (23%) Generics 5,087 (51%) 4,464 (45%) H1-15 H1-16 31
Slide 32: First Half 2016 Business Line Profit
First Half 2016 Business Line Profit $ million 3,742 3,702 106 (3%) 64 (2%) 612 (16%) 707 (19%) OTC & Other Specialty MS Specialty 1,496 (40%) Generics 1,733 (47%) 1,528 (41%) 1,198 (32%) H1-15 H1-16 Segment and business line profit consists of gross profit, less S&M and R&D expenses related to the
Slide 33: Quarterly Dividend
Quarterly Dividend
Slide 34: Teva's Dividend History
Teva’s Dividend History Q2 2016 dividend per ordinary share of $0.34; dividend per MCPS of $17.50 400 $0.40 Total Dividend ($m) $ per Share 350 $0.35 300 $0.30 250 $0.25 200 $0.20 376 376 324 150 281 291 299 294 290 288 289 290 $0.15 268 264 276 272 230 237 214 100 203 203 204 190 $0.10 164 167 172
Slide 35: Financial Outlook
Financial Outlook
Slide 36: FY 2016 Financial Outlook Reiterated
FY 2016 Financial Outlook Reiterated FY 2016 Outlook Revenues 22.0-22.5 $ billions Non GAAP EPS 5.20-5.40 $ Weighted average number of shares, 1,021 in millions Cash flow from Operations 5.7-6.1 $ billions 36
Slide 37: Q&A
Q&A
Slide 38: Additional Information
Additional Information
Slide 39: Q2 2016 GAAP Income Data
Q2 2016 GAAP Income Data $ million Q2 2016 Q2 2015 Q2-16 Q2-15 Change Except EPS Margins Margins Revenues 5,038 4,966 +1% COGS 2,161 42.9% 2,064 41.6% +5% Gross Profit 2,877 57.1% 2,902 58.4% (1%) R&D 375 7.4% 386 7.8% (3%) S&M 952 18.9% 860 17.3% +11% G&A 311 6.2% 325 6.5% (4%) Legal settlements an
Slide 40: Q2 2016 Non GAAP Income Data
Q2 2016 Non GAAP Income Data $ million Q2 2015 Q2 15 Q2 2016 Q2 16 margins Change Except EPS Act margins Revenues 5,038 4,966 +1% COGS 1,888 37.5% 1,846 37.2% +2% Gross Profit 3,150 62.5% 3,120 62.8% +1% R&D 370 7.3% 357 7.2% +4% S&M Royalties 49 74 17.8% 17.0% +6% S&M (w/o Royalties) 849 772 G&A 29
Slide 41: H1 2016 GAAP Income Data
H1 2016 GAAP Income Data $ million H1 2016 H1 2015 H1-16 H1-15 Change Except EPS Margins Margins Revenues 9,848 9,948 (1%) COGS 4,180 42.4% 4,210 42.3% (1%) Gross Profit 5,668 57.6% 5,738 57.7% (1%) R&D 764 7.8% 718 7.2% +6% S&M 1,791 18.2% 1,782 17.9% +1% G&A 615 6.2% 632 6.3% (3%) Legal settlement
Slide 42: H1 2016 Non-GAAP Income Data
H1 2016 GAAP Income Data $ million H1 16 H1 2015 H1 15 H1 2016 Change Except EPS margins Act margins Revenues 9,848 9,948 (1%) COGS 3,682 37.4% 3,766 37.9% (2%) Gross Profit 6,166 62.6% 6,182 62.1% - R&D 745 7.6% 685 6.9% +9% S&M Royalties 71 185 17.5% 17.6% (2%) S&M (w/o Royalties) 1,648 1,569 G&A
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