Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q3 2019 Earnings Presentation
38 slides from Teva Pharmaceutical Industries's earnings presentation, Nov 7, 2019
Slide 1: Third Quarter 2019 Results
Teva Pharmaceutical Industries Ltd. Third Quarter 2019 Results November 7, 2019
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 Cautionary Note Regarding Forward-Looking Statements This presentation 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 uncertain
Slide 3: Kåre Schultz, Chief Executive Officer
Kåre Schultz Chief Executive Officer
Slide 4: Quarterly Highlights
Quarterly Highlights Expense and Results Commercial Debt Reduction — Revenues of $4.26 billion — North America generic — Spend base reduction revenues of $914 million continues to progress; on — GAAP diluted loss per share supported by 39 launches track to achieve 2-year target of $0.29 and non-GAAP
Slide 5: Spend Base Restructuring Progress
Spend Base Restructuring Progress $ billions -3.0 • Last 4 quarters spend base level 16.3 of $13.4 billion, reflecting $2.9 billion spend reduction vs. 2017 -2.9 • Q3 YTD 2019 spend level 13.4 -0.1 13.3 annualization indicates that Teva will achieve the restructuring target • FTE reduced by ~11,550
Slide 6: Leverage Development
Leverage Development $ billions -8.3 34.0 27.6 25.7 Net Debt Q3 2017 Q3 2018 Q3 2019 |6|
Slide 7: Global Generics Sales
Global Generics Sales $ millions 2,573 2,391* 2,265 2,442 2,326 2,279 2,224 488 537 499 441 489 997 498 474 844 919 907 844 845 836 1,088 1,099 947 922 966 946 914 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 North America Europe International * In April 2018, Teva signed a separation agreement with th
Slide 8: AUSTEDO
AUSTEDO® AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 105 30,000 96 $105 million net sales in Q3 2019 ~27K prescriptions dispensed in 25,000 74 Q3 2019 68 20,000 62 Favorable national formulary coverage 15,000 44 Commercial: 89% 30 10,000 Medicare Part
Slide 9: AJOVY
AJOVY® AJOVY® Weekly Normalized TRx Count AJOVY® NBRx Share* Highlights 12,000 • $25 million net sales in Q3 2019 10,346 10,000 • Normalized TRx Share* of ~19% 30% 29% 28%28% 8,000 27% • ~7% of YTD AJOVY® TRx’s are 26% quarterly dosing, ~16% of AJOVY® 6,000 21% patients are on quarterly dose 18% 15%
Slide 10: COPAXONE (U.S. only)
COPAXONE® (U.S. only) COPAXONE® TRx Count Per Quarter COPAXONE® Revenues By Quarter Highlights (‘000s) ($ million) 200 842 802 • $257 million net sales in Q3 2019 167 782 162 160 160 142 • COPAXONE® Q3 2019 exit TRx 126 128 621 share of total U.S. MS market 118 ~16.9% vs. Q3 2018 share ~22.9% 120 11
Slide 11: TRUXIMA: First approved rituximab biosimilar in U.S.
TRUXIMA® First approved rituximab biosimilar in U.S. Launch on November 11, 2019 with full oncology label ̶ Competitive pricing is a priority ̶ Dedicated patient support and services ̶ Available through traditional wholesaler distribution channels (week of November 11, 2019) | 11 |
Slide 12: Opioid Litigation Update
Opioid Litigation Update Announced a settlement agreement with Cuyahoga and Summit counties of Ohio to resolve the counties’ claims and remove Teva from the Track 1 opioid litigation. Reached an agreement in principle with a group of attorneys general from North Carolina, Pennsylvania, Tennessee
Slide 13: Our Focus – Present and Future
Our Focus – Present and Future Key Factors to Drive Long-term Shareholder Value Maximize profits from our existing core businesses Increase sales of new brands and products Execute biosimilar/biologics strategy Deliver manufacturing efficiencies and optimization Secure strong free cash flow generati
Slide 14: Michael McClellan, Chief Financial Officer
Michael McClellan Chief Financial Officer
Slide 15: Q3 2019 Summary
Q3 2019 Summary $ millions, except EPS Q3 2019 Q3 2018 Q3 2019 Q3 2018 GAAP Non-GAAP Revenues 4,264 4,529 4,264 4,529 Operating income (loss) (81) 16 1,051 1,104 Net income (loss) attributable to Teva's ordinary (314) (273) 637 694 shareholders (0.29) (0.27) 0.58 0.68 Earnings (loss) per share ($) 1
Slide 16: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q3 2019 Q3 YTD 2019 Q3 Comments Legal settlements 468 1,171 Mainly related to Opioids reserve Amortization 255 823 Quarterly run-rate Impairment items* 204 1,176 Restructuring 61 140 Contingent consideration* 51 100 Equity compensation plans 35 104 Lenalidomide 0 29 O
Slide 17: Q3 2019 Non-GAAP Summary
Q3 2019 Non-GAAP Summary $ billions, except EPS Q3 2019 Q3 2018 Change Revenues 4.3 4.5 (6%) 2.1 2.3 Gross profit (7%) 49.3% 49.9% 1.1 1.1 Operating income (5%) 24.7% 24.4% EBITDA 1.2 1.3 (6%) Net income attributable to Teva's ordinary 0.6 0.7 (8%) shareholders 0.58 0.68 EPS ($) (14%) 1,093M shares
Slide 18: Q3 2019 Foreign Exchange Impact
Q3 2019 Foreign Exchange Impact $ millions Q3 2019 Q3 2018 Diff FX Effect Diff net FX Revenues 4,264 4,529 (265) (55) (209) Operating income (81) 16 (97) (19) (78) GAAP Operating income 1,051 1,104 (53) (22) (30) Non-GAAP | 18 |
Slide 19: Free Cash Flow
Free Cash Flow $ millions 704 522 551 360 168 Free cash flow* Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 CAPEX, Net** (119) (208) (114) 11 (136) Securitization re-class 402 363 362 384 362 Operating cash flow 421 367 112 (227) 325 • | 19 | * Free cash flow includes cash flow generated from operating ac
Slide 20: Liquidity
Liquidity $ billions 27.6 27.1 Net Debt 26.7 26.6 25.7 EBITDA MAT 5.8 5.3 4.9 4.6 4.6 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Net Debt / EBITDA MAT 4.79 5.10 5.45 5.72 5.62 Leverage 61% 65% 64% 65% 64% * According to Teva's credit agreement covenant ratio - adjusted ratio excludes the EBITDA contrib
Slide 21: Updating 2019 Non-GAAP Outlook
Updating 2019 Non-GAAP Outlook 2019 Updated $ billions, except EPS 2019 Outlook FY 2018 Outlook February 2019 November 2019 Revenues 17.2-17.4 17.0-17.4 18.9 Operating Income 4.0 – 4.2 3.8 – 4.2 4.7 EBITDA 4.5 – 4.8 4.4 – 4.8 5.3 EPS ($) 2.30-2.50 2.20-2.50 2.92 1,093M shares 1,096M shares 1,024M sh
Slide 22: Teva
teva
Slide 23: Additional Information
Additional Information teva
Slide 24: Long-term Financial Targets
Long-term Financial Targets To be achieved within 3-5 years vs. FY2018 Operating Income Margin*1 Cash-to-earnings*2 Net debt/EBITDA*3 27% >80% <3X Committed to utilizing cash flow to pay down debt; we do not plan to raise equity • 1 Operating income margin = Non-GAAP operating income divided by net
Slide 25: Q3 2019 Revenues Trend
Q3 2019 Revenues Trend $ millions 4,529 4,559 4,295 4,337 4,264 326 (7%) 377 (8%) 317(7%) 342 (8%) 314 (7%) 726 (16%) 740 (16%) 668 (16%) 741 (17%) 736 (17%) 1,212 1,204 (27%) (26%) 1,264 1,183 1,163 (29%) (27%) (27%) 2,265 2,238 2,047 2,071 2,051 (50%) (49%) (48%) (48%) (48%) Other Activities Inter
Slide 26: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 COGS 2,268 2,231 2,145 2,149 2,162 S&M 634 768 602 621 551 R&D 243 289 255 271 242 G&A 284 330 280 286 270 Other income (4) (5) (6) (0) (11) Total 3,425 3,613 3,277 3,326 3,213 | 26 |
Slide 27: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions -84 7 -19 44 1,104 1,051 Q3-18 North America Europe International Markets Other Activities Q3-19 | 27 |
Slide 28: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,104 35 (3%) 1,051 1,019 1,011 16 (1%) 123 (11%) 946 21(2%) 55 (5%) 97 (10%) 130 (12%) 28 (3%) 114 (12%) 136 (13%) 297 (27%) 341 403 )32%( 253 (27%) )40%( 316 )31%( 649 (59%) 551 565 498 504 Other Activities (58%) )54%( )49%( )50%( International Market
Slide 29: Quarterly EBITDA
Quarterly EBITDA $ millions 1,254 1,183 1,091 1,154 1,144 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items as well as depreciation expenses) | 29 |
Slide 30: Q3 2019 EBITDA to Free Cash Flow
Q3 2019 EBITDA to Free Cash Flow $ millions (632) 1,183 (213) (190) (23) (60) (9) (136) 551 (362) 362 325 Non-GAAP Finance Tax payments Minority Restructuring WC & Other Securitization Operating Securitization Capex, Free EBITDA expenses, net cash flow reclass Net cash flow Free cash flow includes c
Slide 31: Quarterly Free Cash Flow vs. Q3 2018
Quarterly Free Cash Flow vs. Q3 2018 $ millions -153 (122) (91) 60 704 551 Q3 2018 Non-GAAP Tax Payments WC & Other Q3 2019 Net Income | 31 |
Slide 32: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 North America Segment 2,265 2,238 2,047 2,071 2,051 Generic Medicines 922 1,099 966 946 914 COPAXONE 463 356 208 274 271 AJOVY - 3 20 23 25 TREANDA and BENDEKA 161 140 113 115 124 ProAir* 107 45 59 65 71 QVAR 36 9 64
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Sep 30, 2019 Dec 31, 2018 Diff Cash and Cash Equivalents 1.2 1.8 (0.5) AR Trade 5.3 5.8 (0.6) Pre-paid Expenses and Other Current Assets 1.9 1.5 0.4 Inventory 4.6 4.7 (0.1) Fixed Assets 6.6 6.9 (0.2) Intangible Assets 11.9 14.0 (2.1) Goodwill 24.7 24.9 (0.3) Oth
Slide 34: YTD 2019 Net Debt Movements
YTD 2019 Net Debt Movements $ billions -1.4 (-5%) 27.1 -1.7 25.7 0.5 -0.4 0.1 Net Debt December 31, Debt RCF Utilization Decrease in FX & Other September 30, 2018 Redemption Cash Balance 2019 Gross Debt 28.9 26.9 Cash Balance 1.8 1.2 | 34 | * Net Debt = Gross Debt – Cash Balance
Slide 35: Debt Structure as of September 30, 2019
Debt Structure as of September 30, 2019 $ billions 5.0 USD EUR CHF 4.0 3.0 2.0 1.0 0.0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 … 2036 … 2046 | 35 |
Slide 36: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q3-19 Q3-18 $ millions, except EPS Q3-19 Q3-18 Change Margins Margins Revenues 4,264 4,529 (6%) COGS 2,435 57.1% 2,552 56.3% (5%) Gross profit 1,830 42.9% 1,977 43.7% (7%) R&D 240 5.6% 311 6.9% (23%) S&M 595 13.9% 699 15.4% (15%) G&A 285 6.7% 309 6.8% (8%) Legal settl
Slide 37: YTD GAAP Income Statement
YTD GAAP Income Statement Q3 YTD 2019 Q3 YTD 2018 $ millions, except EPS Q3 YTD 2019 Q3 YTD 2018 Change Margins Margins Revenues 12,896 14,295 (10%) COGS 7,318 56.7% 7,970 55.8% (8%) Gross profit 5,579 43.3% 6,325 44.2% (12%) R&D 778 6.0% 918 6.4% (15%) S&M 1,908 14.8% 2,119 14.8% (10%) G&A 873 6.8%
Slide 38: YTD 2019 Non-GAAP Adjustments
YTD 2019 Non-GAAP Adjustments $ millions Q3 YTD 2019 Comments Impairment items* 1,176 Mainly U.S. intangible assets and product rights ($900M) Legal settlements 1,171 Mainly related to opioids reserve Amortization 823 Restructuring 140 Equity compensation plans 104 Contingent consideration* 100 Main
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