Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q3 2020 Earnings Presentation
36 slides from Teva Pharmaceutical Industries's earnings presentation, Nov 5, 2020
Slide 1: Third Quarter 2020 Results
Teva Pharmaceutical Industries Ltd. Third Quarter 2020 Results November 5, 2020
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains forw ard-looking statements w ithin the meaning of the Private Securities Litigation Reform Act of 1995, w hich are based on management’s current beliefs and expectations and are subject to substantial risks and uncertai
Slide 3: Kåre Schultz, Chief Executive Officer
Kåre Schultz Chief Executive Officer
Slide 4: Highlights
Highlights Financial Business − Revenues of $4 billion − Launched first generic versions of HIV-1 treatments Truvada® and Atripla® tablets in − Non-GAAP EBITDA of $1.2 billion the U.S. − GAAP loss per share of $3.97 (includes − Achieved TRUXIMA® biosimilar market $4.6 billion goodwill impairment), n
Slide 5: Debt Reduction
Debt Reduction $ billions -10.2 34.0 27.6 25.7 23.8 Net Debt Sep 30, Sep 30, Sep 30, Sep 30, 2017 2018 2019 2020 |5|
Slide 6: Revenue Development
Revenue Development $ millions 4,468 4,357 4,149 4,177 4,093 332 (7%) 307 (7%) 3,978 317 (8%) 342 (8%) 314 (8%) 578 3,870 565 316 (8%) (13%) (13%) 335 (9%) 521 (13%) 582 (14%) 565 (14%) 529 488 (13%) (13%) 1,184 (27%) 1,402 1,264 1,183 1,163 (32%) 1,001 1,116 (30%) (28%) (28%) (26%) (28%) 2,373 2,04
Slide 7: AUSTEDO Continues to Grow
AUSTEDO® Continues to Grow AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 168 161 40,000 Net sales of $451 million for the first 9 33,861 136 months of 2020, an increase of 64% 35,000 122 vs. the same period 2019 30,000 105 96 25,000 ~34K prescriptions dispens
Slide 8: AJOVY Positive Momentum Continues
AJOVY® Positive Momentum Continues AJOVY® Weekly Normalized TRx Count AJOVY® NBRx Share* Highlights 14,000 12,849 • $35 million U.S. net sales for Q3 2020 12,000 30% • NBRx share increased to 24% in Q3; 10,000 28% 28% recent weeks ~25%. Normalized TRx 26% 8,000 24% share* approaching 19% 22% 23% 21%
Slide 9: TRUXIMA - First Approved Rituximab Biosimilar in the U.S.
TRUXIMA® - First Approved Rituximab Biosimilar in the U.S. TRUXIMA® Market Shares within rituximab IV, Q3 2020 Highlights 22 20.6% 20.1% 19.5% Reaching ~20% within first year of launch 20 18 Remains only rituximab biosimilar indicated for rheumatoid 15.6% 16.5% arthritis (RA) 16 14.4% 14 12.5% 1
Slide 10: Operating Margin Expansion
Operating Margin Expansion Non-GAAP operating margin % 28% 28.0% 27.8% 25.5 - 26% 26% 25.9% 24.5% 24% 2017 2018 2019 2020 2023 | 10 |
Slide 11: Long-Term Financial Targets
Long-Term Financial Targets To be achieved by year-end 2023 Operating Income Margin (2)(3) Cash-to-earnings (1)(3)(4) Net debt/EBITDA (1)(3)(5) 28% >80% <3X Committed to utilizing cash flow to pay down debt; we do not plan to raise equity (1) Free cash flow includes cash flow generated from operatin
Slide 12: Eli Kalif, EVP & Chief Financial Officer
Eli Kalif EVP & Chief Financial Officer
Slide 13: Q3 2020 Summary
Q3 2020 Summary $ millions, except EPS Q3 2020 Q3 2019 Q3 2020 Q3 2019 GAAP Non-GAAP Revenues* 3,978 4,093 3,978 4,093 Operating income (loss) (4,342) (81) 1,025 1,051 Net income (loss) attributable to Teva (4,349) (314) 637 637 (3.97) (0.29) 0.58 0.58 Earnings (loss) per share ($)** 1,096 million 1
Slide 14: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q3 2020 Comments Due to our current market capitalization, which is influenced by uncertainty regarding the timeframe for Goodwill Impairment 4,628 resolution of certain litigations in our North America reporting unit Mainly US Gx intangible assets, and fixed assets o
Slide 15: Non-GAAP Summary
Non-GAAP Summary $ billions, except EPS Q3 2020 Q3 2019 Change Q3 YTD 2020 Q3 YTD 2019 Change Revenues* 4.0 4.1 (3%) 12.2 12.4 (2%) 2.1 2.1 6.4 6.4 Gross profit 52.4% 51.4% 1% 52.5% 51.9% 0.6% 1.0 1.1 3.2 3.1 Operating income 25.8% 25.7% 0.1% 26.6% 24.8% 1.8% EBITDA 1.2 1.2 - 3.6 3.5 4% Net income a
Slide 16: Spend Base
Spend Base $ millions -4% 9,339 8,958 COGS -3% OPEX 3,042 2,953 5,978 5,799 (64%) (65%) 1,990 1,894 (65%) (64%) 3,360 3,159 (36%) 1,052 1,059 (35%) (35%) (36%) Q3 YTD 2019 Q3 YTD 2020 Q3 2019 Q3 2020 Revenues 12,420 12,206 4,093 3,978 GP% 51.9% 52.5% 51.4% 52.4% OP% 24.8% 26.6% 25.7% 25.8% | 16 | IN
Slide 17: Free Cash Flow
Free Cash Flow $ millions 974 551 551 582 506 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 | 17 | * Free cash flow includes cash flow generated from operating activities net of capital expenditures and deferred purchase price cash component collected for securitized trade receivables.
Slide 18: Debt Reduction
Debt Reduction $ billions 25.7 24.9 Net Debt 24.3 23.9 23.8 4.6 4.7 4.9 4.9 4.8 EBITDA MAT Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Net Debt / EBITDA MAT* 5.62 5.32 4.95 4.90 4.92 Leverage 64% 64% 64% 64% 71% | 18 | * Teva's Net Debt/EBITDA MAT covenant ratio limits are 6.0x for H1 2020 and 5.75x for
Slide 19: 2020 Non-GAAP Outlook
2020 Non-GAAP Outlook August 2020 November 2020 $ billions, except EPS FY 2019 Comments Outlook Outlook Updated range reflects impact of COVID-19 Revenues 16.9 16.6 - 17.0 16.5 - 16.8 on customer purchasing patterns and overall utilization by patients COPAXONE® 1.5 ~1.2 ~1.3 Improved performance AUS
Slide 20: Q&A
Q&A
Slide 21: Additional Information
Additional Information teva
Slide 22: Q3 YTD 2020 Summary
Q3 YTD 2020 Summary Q3 YTD Q3 YTD Q3 YTD Q3 YTD $ millions, except EPS 2020 2019 2020 2019 GAAP Non-GAAP Revenues* 12,206 12,420 12,206 12,420 Operating income (loss) (3,978) (591) 3,248 3,081 Net income (loss) attributable to Teva (4,140) (1,108) 2,077 1,943 (3.78) (1.02) 1.89 1.78 Earnings (loss)
Slide 23: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q3 2020 Q3 2019 $ millions, except EPS Q3 2020 Q3 2019 Change Margins Margins Revenues* 3,978 4,093 (3%) COGS 2,126 53.4% 2,264 55.3% (6%) Gross profit 1,852 46.6% 1,830 44.7% 1% R&D 258 6.5% 240 5.9% 7% S&M 605 15.2% 595 14.5% 2% G&A 279 7.0% 285 7.0% (2%) Legal sett
Slide 24: Q3 YTD 2020 GAAP Income Statement
Q3 YTD 2020 GAAP Income Statement Q3 YTD 2020 Q3 YTD 2019 $ millions, except EPS Q3 YTD 2020 Q3 YTD 2019 Change Margins Margins Revenues* 12,206 12,420 (2%) COGS 6,528 53.5% 6,841 55.1% (5%) Gross profit 5,678 46.5% 5,579 44.9% 2% R&D 704 5.8% 778 6.3% (9%) S&M 1,815 14.9% 1,908 15.4% (5%) G&A 846 6
Slide 25: Q3 2020 Foreign Exchange Impact
Q3 2020 Foreign Exchange Impact $ millions Q3 2020 Q3 2019 Diff FX Effect Diff net FX Revenues 3,978 4,093 (115) 14 (129) Operating income (loss) (4,342) (81) (4,261) (18) (4,243) GAAP Operating income 1,025 1,051 (26) (13) (13) Non-GAAP | 25 |
Slide 26: Net Revenue
Net Revenue Net Revenues* and Profitability (Non-GAAP) ($ millions) 4,468 4,357 4,177 4,149 4,093 3,978 3,870 51.8% 52.4% 51.4% 50.6% 53.1% 52.0% 52.4% 24.6% 24.2% 25.7% 23.8% 28.5% 25.3% 25.8% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Net Revenues Gross Margin Operating Margin | 26 |
Slide 27: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 North America Segment 2,051 2,373 2,082 2,047 2,017 Generic Medicines 914 1,137 952 923 928 COPAXONE® 271 264 198 238 236 AJOVY® 25 25 29 34 35 BENDEKA® and TREANDA® 124 125 105 103 105 ProAir®* 71 80 59 66 50 QVAR®
Slide 28: Profitability
Profitability Profits and EPS (Non-GAAP) ($ millions, EPS in $) 1,244 1,051 1,061 1,019 1,011 1,025 979 835 654 653 637 683 637 605 0.60 0.60 0.58 0.62 0.76 0.55 0.58 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Net Income Operating Profit EPS | 28 |
Slide 29: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q3 2019 Q1 2020 Q2 2020 Q3 2020 Q3-YTD-2019 Q3-YTD-2020 COGS 1,990 2,046 1,859 1,894 5,978 5,799 S&M 551 570 559 566 1,774 1,695 R&D 242 221 233 233 768 687 G&A 270 290 245 269 836 803 Other income (11) (13) (6) (8) (17) (27) Total 3,042 3,114 2,891 2,953 9,339
Slide 30: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions -5 -29 -5 12 1,051 1,025 Q3-19 North America Europe International Markets Other Activities Q3-20 | 30 |
Slide 31: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,244 36 (3%) 1,051 1,061 156 (13%) 17 (2%) 1,025 16 (1%) 979 101 (10%) 28 (3%) 130 (12%) 66 (7%) 125 (12%) 258 502 97 (10%) 341 ( 24%) ( 40%) 244 312 ( 32%) ( 30%) ( 25%) 686 565 ( 65%) 550 573 560 ( 54%) ( 44%) ( 59%) ( 55%) Other Activities Internati
Slide 32: Quarterly EBITDA
Quarterly EBITDA $ millions 1,375 1,183 1,204 1,153 1,108 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 | 32 | * EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items, as well as depreciation expenses).
Slide 33: Q3 2020 EBITDA to Free Cash Flow
Q3 2020 EBITDA to Free Cash Flow $ million (647) (-56%) (265) (237) 9 (74) 52 1,153 (143) (322) 333 (134) 506 307 Non-GAAP Interest Tax payments Inventory AP & Other Securitization* Operating Securitization Asset sales; Free EBITDA payments, net cash flow reclass Capex gross cash flow | 33 | * Q3 se
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Sep 30, 2020 Jun 30, 2020 Diff Cash and Cash Equivalents 1.8 2.4 (0.6) AR Trade 4.4 4.5 (0.2) Pre-paid Expenses and Other Current Assets 1.4 1.5 (0.0) Inventory 4.5 4.4 0.2 Fixed Assets 6.2 6.1 0.0 Intangible Assets 9.3 9.9 (0.6) Goodwill 20.2 24.6 (4.4) Other L
Slide 35: Q3 2020 Debt Movements
Q3 2020 Debt Movements $ billions -1.2 0.1 0.4 -1.8 26.3 25.6 23.8 Jun 30, July Repayment RCF* Draw FX Sep 30, Cash balance Sep 30, 2020 2020 2020 Gross Debt Gross Debt Net Debt | 35 | * RCF – Revolving Credit Facility
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