Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q1 2020 Earnings Presentation
36 slides from Teva Pharmaceutical Industries's earnings presentation, May 7, 2020
Slide 1: First Quarter 2020 Results
Teva Pharmaceutical Industries Ltd. First Quarter 2020 Results May 7, 2020
Slide 2: Cautionary Note Regarding Forward-Looking Statements
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 uncertainti
Slide 3: Kåre Schultz, Chief Executive Officer
Kåre Schultz Chief Executive Officer
Slide 4: Teva's Response to COVID-19
Teva’s Response to COVID-19 B u s in e s s So u r c in g a n d Our Our C o n t in u ity Pr o d u c t io n Emp lo ye e s C o mmu n ities ~200 million patients continue to All facilities remain open to The health and well-being of Supporting local governments have access to our essential meet
Slide 5: COVID-19 Dynamics
COVID-19 Dynamics Positive Risk - Industry and governments working together - Sources of raw material and finished dosage to ensure availability of essential medicines concentrated in a few countries - Overstocking of certain medicines can - Worldwide demand for new and existing change the supply dy
Slide 6: Q1 2020 Highlights
Q1 2020 Highlights Financial Business − Revenues of $4.4 billion − AJOVY® Autoinjector approved in the U.S.; launch initiated in April 2020 − Non-GAAP EBITDA of $1.4 billion − AJOVY® launches continue in EU; − GAAP EPS of $0.06; Non-GAAP EPS of reimbursement now in 12 countries, NICE $0.76 approval
Slide 7: Revenue Development
Revenue Development $ millions 4,468 4,357 4,149 4,177 4,093 332 (7%) 307 (7%) 317 (8%) 342 (8%) 314 (8%) 578 (13%) 565 (13%) 521 (13%) 582 (14%) 565 (14%) Other Activities 1,184 1,264 (27%) 1,402 International Markets 1,183 1,163 (30%) (32%) Europe (28%) (28%) North America 2,373 2,047 2,071 2,051
Slide 8: Growth Drivers
Growth Drivers J AJOVY L (fremanezumab-vfrm) Austedo . injection 225 mg/1.5 mL S ‘ =Austedo r deutetrabenazine AJOvY® ea ( mg, 9mg benazine) —_ o==3 fora vey ——— Se eeeeecenens til 18] teva
Slide 9: AUSTEDO TRx and Net Sales Trend
AUSTEDO® TRx and Net Sales Trend AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 35,000 32,333 160 $122M in U.S. net sales for Q1 2020 30,000 140 136 ~32K prescriptions dispensed in Q1 122 120 2020 25,000 105 100 96 20,000 Favorable national formulary 80 74 6
Slide 10: AJOVY
AJOVY® AJOVYTM Weekly Normalized TRx Count – U.S. AJOVYTM NBRx Share* - U.S. Highlights • $29M in U.S. net sales for Q1 2020 14,000 • Normalized TRx Share* of ~15% 12,000 30% • Share is trending upward with 9,044 29% 28%28% 10,000 changes in promotional strategy; 27% 26% expected to continue with in
Slide 11: Gross Margin Improvement Program Focused on 5 Key Levers
Gross Margin Improvement Program Focused on 5 Key Levers E2E Operational supply & quality chain Agile excellence integration operating Procurement Network model and cost optimization & organization excellence restructuring | 11 |
Slide 12: Long-Term Financial Targets
Long-Term Financial Targets To be achieved by year-end 2023 Operating Income Margin (1)(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 opera
Slide 13: Eli Kalif, EVP & Chief Financial Officer
Eli Kalif EVP & Chief Financial Officer
Slide 14: Q1 2020 Summary
Q1 2020 Summary $ millions, except EPS Q1 2020 Q1 2019 Q1 2020 Q1 2019 GAAP Non-GAAP Revenues* 4,357 4,149 4,357 4,149 Operating income 191 134 1,244 1,019 Net income (loss) 69 (105) 835 654 0.06 (0.10) 0.76 0.60 Earnings (loss) per share ($) 1,096 million 1,090 million 1,096 million 1,093 million s
Slide 15: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q1 2020 Comments Mainly comprised of impairments of long-lived intangible assets including results in AUSTEDO for the treatment of Tourette syndrome, ongoing regulatory pricing reductions Impairment items* 724 and generic competition in Japan and updated marketing ass
Slide 16: Q1 2020 Non-GAAP Summary
Q1 2020 Non-GAAP Summary $ billions, except EPS Q1 2020 Q1 2019 Change Revenues* 4.4 4.1 5% 2.3 2.1 Gross profit 8% 53.1% 51.8% 1.2 1.0 Operating income 22% 28.5% 24.6% EBITDA 1.4 1.2 19% Net income 0.8 0.7 28% 0.76 0.60 EPS ($) 1,096 million 1,093 million 27% shares shares Free cash flow** 0.6 0.4
Slide 17: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 North America Segment 2,047 2,071 2,051 2,373 2,082 Generic Medicines 966 946 914 1,137 952 COPAXONE® 208 274 271 264 198 AJOVY 20 23 25 25 29 BENDEKA and TREANDA 122 125 124 125 105 ProAir®* 59 65 71 80 59 QVAR® 64
Slide 18: Spend Base
Spend Base $ millions -17 (-1%) +11 Net of FX -293 (-9%) -288 Net of FX 3,406 3,130 3,114 2,206 1,999 (65%) 2,046 (64%) (66%) 1,131 1,200 1,068 (36%) (35%) (34%) COGS OPEX Q1 2019 Q4 2019 Q1 2020 Revenues 4,149 4,468 4,357 GP% 51.8% 50.6% 53.1% OP% 24.6% 23.8% 28.5% | 18 |
Slide 19: Free Cash Flow
Free Cash Flow $ millions LTM = >$2.2 billion Free cash flow* 974 551 551 360 168 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 • | 19 | * Free cash flow includes cash flow generated from operating activities net of capital expenditures and deferred purchase price cash component collected for securitized
Slide 20: Liquidity
Liquidity $ billions 26.7 26.6 25.7 24.9 Net Debt 24.3 4.9 4.6 4.6 4.7 4.9 EBITDA MAT Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Net Debt / EBITDA MAT 5.45 5.72 5.62 5.32 4.95 Leverage 64% 65% 64% 64% 64% | 20 | * Net Debt (Gross Debt – Cash Balance) divided by EBITDA MAT (non-GAAP); Teva's Net Debt/EB
Slide 21: 2020 Outlook - Main Assumptions
2020 Outlook - Main Assumptions Product / Business FY 2019 Commentary for 2020 Global COPAXONE $1.5 billion Continued generic erosion; revenues of ~$1.2 billion AUSTEDO $412 million Continued increase of revenues in the U.S. to ~$650 million Global AJOVY $96 million Continued increase of revenues to
Slide 22: Reaffirming 2020 Non-GAAP Outlook
Reaffirming 2020 Non-GAAP Outlook $ billions, except EPS 2020 Outlook FY 2019 Revenues 16.6 - 17.0 16.9 Operating Income 4.0 - 4.4 4.1 EBITDA 4.5 - 4.9 4.7 EPS ($) 2.30 - 2.55 2.40 1,098 million shares 1,094 million shares Free Cash Flow* 1.8 - 2.2 2.1 • * Free Cash Flow includes cash flow generated
Slide 23: Teva
teva
Slide 24: Additional Information
Additional Information teva
Slide 25: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q1 2020 Q1 2019 $ millions, except EPS Q1 2020 Q1 2019 Change Margins Margins Revenues* 4,357 4,149 5% COGS* 2,294 52.7% 2,293 55.3% 0% Gross profit 2,063 47.3% 1,856 44.7% 11% R&D 221 5.1% 261 6.3% (15%) S&M 613 14.1% 648 15.6% (5%) G&A 304 7.0% 292 7.0% 4% Legal set
Slide 26: Q1 2020 Foreign Exchange Impact
Q1 2020 Foreign Exchange Impact $ millions Q1 2020 Q1 2019 Diff FX Effect* Diff net FX Revenues 4,357 4,149 208 (3) 211 Operating income 191 134 57 27 31 GAAP Operating income 1,244 1,019 225 25 200 Non-GAAP Some amounts may not sum due to rounding. | 26 | * Net of hedging activities.
Slide 27: Net Revenue and Profitability (1/2)
Net Revenue and Profitability (1/2)(1) Net Revenues* and Profitability (Non-GAAP) ($ millions) 5,258 4,916 4,551 4,418 4,468 4,386 4,357 4,149 4,177 4,093 52.3% 53.3% 51.4% 51.6% 52.7% 51.8% 52.4% 51.4% 50.6% 53.1% 26.3% 29.2% 27.2% 25.2% 24.6% 25.7% 28.5% 21.4% 24.2% 23.8% Q4 2017 Q1 2018 Q2 2018 Q
Slide 28: Net Revenue and Profitability (2/2)
Net Revenue and Profitability (2/2)(1) Profits and EPS (Non-GAAP) ($ millions, EPS in $) 1,385 1,435 1,238 1,244 1,104 1,019 1,051 1,061 1,011 946 1,014 1,019 859 835 759 654 653 637 683 597 0.94 0.94 0.78 0.68 0.60 0.60 0.62 0.76 0.53 0.58 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3
Slide 29: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 COGS 1,999 1,989 1,990 2,206 2,046 S&M 602 621 551 665 570 R&D 255 271 242 237 221 G&A 280 286 270 309 290 Other income (6) (0) (11) (9) (13) Total 3,130 3,167 3,042 3,406 3,114 | 29 |
Slide 30: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 15 59 99 52 1,244 1,019 Q1-19 North America Europe International Markets Other Activities Q1-20 | 30 |
Slide 31: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,244 36 (3%) 1,051 1,061 156 (13%) 1,019 1,011 16 (1%) 17 (2%) 21(2%) 55 (5%) 101 (10%) 97 (10%) 130 (12%) 136 (13%) 258 502 341 (24%) (40%) 403 (32%) (40%) 316 (31%) 686 504 565 (65%) 550 Other Activities 498 (50%) (54%) (44%) International Markets (4
Slide 32: Quarterly EBITDA
Quarterly EBITDA $ millions 1,375 1,154 1,144 1,183 1,204 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 * EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items, as well as depreciation expenses). | 32 |
Slide 33: Q1 2020 EBITDA to Free Cash Flow
Q1 2020 EBITDA to Free Cash Flow $ millions (824) (195) (155) (32) (72) (259) 1,375 6 (128) (356) 368 (122) 551 305 Non-GAAP Interest Tax payments Legal Restructuring Working Securitization Operating Securitization Asset sales; Free EBITDA payments, net Settlements, Capital cash flow reclass Capex g
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Mar 31, 2020 Dec 31, 2019 Diff Cash and Cash Equivalents 1.8 2.0 (0.2) AR Trade 5.2 5.7 (0.5) Pre-paid Expenses and Other Current Assets 2.1 1.9 0.2 Inventory 4.3 4.4 (0.1) Fixed Assets 6.2 6.4 (0.2) Intangible Assets 10.3 11.2 (1.0) Goodwill 24.5 24.8 (0.4) Oth
Slide 35: Q1 2020 Net Debt Movements
Q1 2020 Net Debt Movements $ billions -0.6 (-3%) -0.7 0.2 -0.1 24.9 Net Debt 24.3 December 31, Debt Repayment Decrease in FX & Other March 31, 2019 Cash Balance 2020 Gross Debt 26.9 26.1 Cash Balance 2.0 1.8 | 35 | * Net Debt = Gross Debt – Cash Balance.
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