Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q3 2018 Earnings Presentation
38 slides from Teva Pharmaceutical Industries's earnings presentation, Nov 1, 2018
Slide 1: Teva Pharmaceutical Industries Ltd. Q3 2018
Teva Pharmaceutical Industries Ltd. Q3 2018 November 1, 2018
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
4 Quarterly highlights Q3’18 figures include: Revenues of $4.53 billion GAAP diluted loss per share of $0.27 and non-GAAP diluted EPS of $0.68 Free cash flow of $0.7 billion Restructuring program on-track: Significant spend base reduction of $1.8 billion since start of year Approval and
Slide 5: Spend Base: YTD 2018 vs. YTD 2017
5 Spend Base: YTD 2018 vs. YTD 2017 $ billions -1.8 (-14%) 12.3 (2.0) • YTD Spend base reduction of $1.8B 0.2 10.5 already achieved in 2018 • FTE reduced by 9,100 since the start of the restructuring plan YTD 2017 Spend base * FX YTD 2018 reduction headwind *Spend Base = Non-GAAP COGS + Operating Ex
Slide 6: 2018 Net Debt Movement
6 2018 Net Debt Movement $ billions -3.9 (-12%) 4.5 (3.8) 31.5 (3.4) (0.9) 27.6 (0.3) Net Debt December 31, March 2018 Senior Notes Term Loans Increase in FX Fluctuations September 30, 2017 New Issuance Repayment Repayment Cash Balances & Other, Net 2018 Gross Debt 32.5 29.5 Cash Balance 1.0 1.9 * N
Slide 7: Pipeline Update
7 Pipeline Update Progress on multiple fronts - Approved and launched in the U.S. AJOVY™ - Expect EMA action first half of 2019 - Announced positive topline phase III results with partner Regeneron fasinumab - Long-term phase III trial ongoing CT-P10 (a - FDA AdComm unanimously recommended to approv
Slide 8: Brendan O’Grady, EVP, North America Commercial
Brendan O’Grady EVP, North America Commercial
Slide 9: Teva North America Business
9 Teva North America Business — Dynamic, diversified pharmaceutical business — Largest generics portfolio in the world, a wide-range of specialty products, and an extensive distribution mechanism — Strategic investments in AUSTEDO® and AJOVYTM as part of our long-term plan to a stabilize and grow bu
Slide 10: AJOVY Launch: Strong Demand and Easy Access
10 AJOVYTM Launch: Strong Demand and Easy Access • Demand continues to grow steadily over the first four weeks of launch • Physicians and patients choosing the flexibility of quarterly and monthly dosing • Headache Specialists & Neurologists account for ~70% of AJOVY prescriptions since launch • Our
Slide 11: AJOVY Initial Demand Continues To Grow
11 AJOVYTM Initial Demand Continues To Grow aCGRP Launch Aligned TRx 2,500 • AJOVYTM launched week of 9/24 2,281 2,181 2,000 1,877 • AJOVYTM YTD TRx has grown to 4,439 • 6,100 AJOVYTM YTD normalized TRx 1,564 1,500 1,393 • ~ 20% of AJOVYTM YTD TRx are Quarterly TRx (000) 1,000 • Over 1,600 unique HC
Slide 12: AUSTEDO continues to grow
12 AUSTEDO® continues to grow AUSTEDO® Unique Patients Dispensed Per Quarter Austedo® revenues by quarter 8,000 7,600 $ million 62 7,000 5,600 6,000 44 5,000 * 4,100 4,000 30 2,900 3,000 17 2,000 1,321 1,000 724 6 1 0 0 *Q1 2018 unique patient dispensed count changed to 4,100 from 3,310 previously r
Slide 13: COPAXONE Maintaining Share in the U.S.
13 COPAXONE® Maintaining Share in the U.S. Total Glatiramer Acetate Weekly TRx Volume Global COPAXONE ® Revenues by quarter $ million US EU INTL 42 34 Total GA TRx COPAXONE Brand TRx Glatopa TRx Mylan GA TRx 138 150 14,000 45 12,000 155 10,000 30 38 30 153 140 124 8,000 842 802 6,000 621 4,000 462 4
Slide 14: Michael McClellan, Chief Financial Officer
Michael McClellan Chief Financial Officer
Slide 15: Q3 2018 Summary
15 Q3 2018 Summary $ millions, except EPS Q3 2018 Q3 2017 Q3 2018 Q3 2017 GAAP Non-GAAP Revenues 4,529 5,617 4,529 5,617 Operating income (loss) 16 378 1,104 1,470 Net income (loss) attributable to Teva (208) 595 759 1,077 (0.27) 0.52 0.68 1.00 Earnings (loss) per share ($) 1,018M 1,017M 1,022M 1,01
Slide 16: Q3 2018 Non-GAAP Adjustments
16 Q3 2018 Non-GAAP Adjustments $ millions Q3 2018 Highlights Impairment 530 Mainly U.S. intangible assets and product rights ($483M) Amortization 297 Quarterly run-rate Restructuring 88 In Process R&D 60 Fasinumab milestone payment Equity compensation plans 45 Contingent consideration 29 Mainly Ajo
Slide 17: Q3 2018 Non-GAAP Summary
17 Q3 2018 Non-GAAP Summary $ billions, except EPS Q3 2018 Q3 2017 Change Revenues 4.5 5.6 (19%) Gross profit 2.3 3.0 (23%) 50.9% 53.1% Operating income 1.1 1.5 (25%) 24.4% 26.2% EBITDA 1.3 1.6 (23%) Net income 0.8 1.1 (30%) EPS ($) 0.68 1.00 (32%) 1,022M shares 1,017M shares Free cash flow* 0.7 0.9
Slide 18: Q3 2018 Foreign Exchange Impact
18 Q3 2018 Foreign Exchange Impact $ millions Q3 2018 Q3 2017 Diff FX Effect Diff net FX Revenues 4,529 5,617 (1,088) (80) (1,008) Operating income 16 378 (362) (34) (328) GAAP Operating income 1,104 1,470 (366) (37) (329) Non-GAAP
Slide 19: Revenues by Activity and Geographical Area
19 Revenues by Activity and Geographical Area $ millions Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 North America Segment 3,043 2,689 2,531 2,263 2,265 Generic Medicines 1,233 1,224 1,088 947 922 Copaxone 819 641 476 464 463 Treanda and Bendeka 179 158 181 160 161 ProAir 155 102 130 115 107 QVAR 83 48 107 30 36
Slide 20: Spend base trends (non-GAAP)
20 Spend base trends (non-GAAP) $ millions Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 COGS 2,636 2,612 2,414 2,334 2,224 S&M 788 786 715 662 678 R&D 367 295 289 281 243 G&A 360 335 322 292 284 Other income (4) (15) (110) (106) (4) Total 4,147 4,013 3,630 3,463 3,425
Slide 21: Free Cash Flow
21 Free Cash Flow $ millions 1,894 Free Cash Flow* 920 934 704 559 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 CAPEX, Net Securitization re-class Operating cash flow • * Free Cash Flow includes cash flow generated from operating activities net of capital expenditures and deferred purchase price cash com
Slide 22: 2018 Financial Outlook
2018 Financial Outlook teva
Slide 23: 2018 Non-GAAP Financial Outlook
23 2018 Non-GAAP Financial Outlook 2018 Outlook – August 2018 November 2018 Original (Feb 2018) Outlook Outlook Revenues 18.3-18.8 18.5-19.0 18.6-19.0 ($ billions) Non-GAAP Operating income 4.0-4.3 4.3-4.6 4.6-4.8 ($ billions) Non-GAAP EBITDA 4.7-5.0 5.0-5.3 5.2-5.4 ($ billions) Non-GAAP EPS 2.25-2.
Slide 24: Q&A
Q&A teva
Slide 25: Additional Information
Additional Information teva
Slide 26: Quarterly EBITDA
26 Quarterly EBITDA $ millions 1,618 1,534 1,587 1,387 1,253 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items) and excludes depreciation expenses
Slide 27: Q3 2018 Revenues Trend
27 Q3 2018 Revenues Trend $ millions 5,617 312 (6%) 5,398 349 (6%) 5,065 882 (16%) 342 (7%) 4,701 910 (17%) 4,529 321 (7%) Other Activities 750 (15%) 326 (7%) 1,380 789 (17%) International markets 726 (16%) Europe (25%) 1,450 1,442 (27%) North America (28%) 1,328 1,212 (28%) (27%) 3,043 2,689 2,531
Slide 28: Q3 2018 Revenues
28 Q3 2018 Revenues $ millions 5,617 312 (6%) 882 (16%) 4,529 326 (7%) Other Activities 1,380 726 (16%) International markets (25%) Europe 1,212 North America (27%) 3,043 (54%) 2,265 (50%) Q3-17 Q3-18
Slide 29: Quarterly Non-GAAP Operating Income
29 Quarterly Non-GAAP Operating Income $ millions 1,470 110 (7%) 241 (16%) 1,104 35 (3%) Other Activities 123 (11%) International Markets Europe 297 (27%) North America 1,130 (77%) 649 (59%) -11 (-1%) Q3-17 Q3-18 Profit is presented on a non-GAAP basis. Percentages may not add up to 100% due to roun
Slide 30: Quarterly Non-GAAP Operating Income
30 Quarterly Non-GAAP Operating Income $ millions -434 48 -103 48 74 1,470 1,104 Q3-17 North America Europe International Other Activities Divestment & Q3-18 Markets Other Divestment & Other mainly includes Women’s Health divestment, closure of Hungary distribution activities, deconsolidation of Ven
Slide 31: Non-GAAP Operating Income Trend
31 Non-GAAP Operating Income Trend $ millions 1,470 1,435 110 (7%) 1,385 21 (1%) 122 (9%) 155 (11%) 1,238 241 (16%) 31 (3%) 139 (11%) 1,104 301 (22%) 377 (26%) 35 (3%) 123 (11%) Other Activities 346 (28%) International Markets 297 (27%) Europe North America 1,130 (77%) 938 915 (68%) (64%) 722 649 (5
Slide 32: Quarterly GAAP Income Statement
32 Quarterly GAAP Income Statement $ millions, except EPS Q3-18 Q3-18 Q3-17 Q3-17 Change Margins Margins Revenues 4,529 5,617 (19%) COGS 2,508 55.4% 2,967 52.8% (15%) Gross profit 2,021 44.6% 2,650 47.2% (24%) R&D 311 6.9% 531 9.5% (41%) S&M 743 16.4% 843 15.0% (12%) G&A 309 6.8% 372 6.6% (17%) Lega
Slide 33: YTD 2018 GAAP Income Statement
33 YTD 2018 GAAP Income Statement $ millions, except EPS YTD-18 YTD-18 YTD-17 YTD-17 Change Margins Margins Revenues 14,295 16,987 (16%) COGS 7,865 55.0% 8,643 50.9% (9%) Gross profit 6,430 45.0% 8,344 49.1% (23%) R&D 918 6.4% 1,432 8.4% (36%) S&M 2,224 15.6% 2,745 16.2% (19%) G&A 954 6.7% 1,101 6.5
Slide 34: YTD 2018 Non-GAAP Adjustments
34 YTD 2018 Non-GAAP Adjustments $ millions YTD 2018 Highlights US intangible assets, Mexico reporting unit goodwill, termination of PGT Impairment items 1,904 Healthcare JV, production sites slated for closure Amortization 909 Restructuring 442 Equity compensation 122 In process R&D 82 Contingent c
Slide 35: Consolidated Balance Sheet
35 Consolidated Balance Sheet Sep 30, Dec 31, $ billions Diff 2018 2017 Cash and Cash Equivalents 1.9 1.0 0.9 AR Trade 5.7 7.1 (1.5) Pre-paid Expenses and Other Current Assets 1.5 2.4 (0.9) Inventory 4.9 4.9 (0.1) Fixed Assets 7.1 7.7 (0.6) Intangible Assets 15.3 17.6 (2.3) Goodwill 27.6 28.4 (0.8)
Slide 36: Liquidity
36 Liquidity $ billions Net Debt 34.0 31.5 29.3 28.4 27.6 EBITDA MAT 7.2 6.7 6.5 6.1 5.8 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Net Debt / EBITDA MAT 4.71 4.73 4.53 4.63 4.79 Net Debt / EBITDA MAT – adjusted ratio* 4.82 4.68 4.73 4.81 Leverage 53% 63% 60% 61% 61% * According to Teva's credit agreem
Slide 37: Q3-18 Cash Flow Bridge
37 Q3-18 Cash Flow Bridge $ millions -55 149 132 Net of Securitization, change in WC: +130 119 83 402 272 759 704 421 Net income Depreciation Restructuring Other Working capital Operating Securitization Capex , Free cash non-GAAP cash flow reclass Net flow* • * Free Cash Flow includes cash flow gene
Slide 38: Updated Debt Maturities
38 Updated Debt Maturities $ millions 5,000 CHF $9.0 billion 4,500 EUR 4,000 USD 3,500 3,000 2,500 2,000 1,500 1,000 500 0 18* 19 20 21 22 23 24 25 26 27 28 … 36 … 46 * CHF 450m ($458m equivalent) senior notes repayment date is October 25th, 2018; following the repayment our pro forma gross debt wil
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