Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q2 2019 Earnings Presentation
38 slides from Teva Pharmaceutical Industries's earnings presentation, Aug 7, 2019
Slide 1: Second Quarter 2019 Results
Teva Pharmaceutical Industries Ltd. Second Quarter 2019 Results August 7, 2019
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: Quarterly Highlights
Quarterly Highlights Expense and Results Commercial Debt Reduction — Revenues of $4.34 billion — Stable NA generics business — Spend base reduction supported by new launches continues to progress; on — GAAP diluted loss per share and portfolio optimization track to achieve 2-year target of $0.63 and
Slide 5: Development of Results (Non GAAP)
Development of Results (Non GAAP) Revenues and profitability GM OM |5| GM - gross margin, OM - operating margin
Slide 6: Development of Results (Non GAAP)
Development of Results (Non GAAP) Profits and EPS $ millions, EPS in $ OP NI EPS |6| OP - operating profit, NI - net income
Slide 7: Spend Base Restructuring Progress
Spend Base Restructuring Progress $ billions (3.0) 16.3 (2.7) • Last 4 quarters spend base level of $13.6bn, reflecting $2.7 billion 13.6 (0.3) 13.3 spend reduction vs. 2017 • H1 2019 $6.6 billion spend level annualization indicates that Teva will achieve the restructuring target • FTE reduced by ~1
Slide 8: AJOVY
AJOVY® AJOVYTM Weekly Normalized TRx Count AJOVYTM NBRx Share* Highlights 12,000 40% • $23M in Net Sales for Q2 2019 10,000 35% • Normalized TRx Share* of ~22% 30% 9,171 30% 29% 28% 28% 8,000 27% • ~8% of YTD AJOVY® TRx’s are 26% 25% quarterly dosing, ~15% of AJOVY® 6,000 21% patients are on quarter
Slide 9: AUSTEDO
AUSTEDO® AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 30,000 96 $96M in Net Sales for Q2 2019 24,278 Over 24K prescriptions dispensed 25,000 74 in Q2 2019 69 20,000 62 Favorable national formulary coverage 15,000 44 Commercial: 89% 30 10,000 Medicare P
Slide 10: COPAXONE (U.S. only)
COPAXONE® (U.S. only) COPAXONE® TRx Count Per Quarter COPAXONE® Revenues By Quarter Highlights (‘000s) ($ million) 200 842 • $260M in Net Sales for Q2 2019 782 802 167 162 160 160 142 • COPAXONE® Q2 2019 exit TRx share 621 of total U.S. MS market ~17.5% vs. 126 128 March 2019 share ~17.9% 118 120 11
Slide 11: Our Commitment
Our Commitment Our mission is to be a global leader in generics and biopharmaceuticals, improving the lives of patients. Underpinning every aspect of our work is a continued promise to act with integrity and maintain a culture of ethical conduct and compliance. We are committed to conducting o
Slide 12: Legacy Litigations
Legacy Litigations Opioids (dates back to 1998) and Pricing (2012–2016) We assess what will best serve the company and stakeholder interests in real time We deny liability and will continue to vigorously defend ourselves in these legacy litigations Opioids update: We maintain our defenses
Slide 13: 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 14: Michael McClellan, Chief Financial Officer
Michael McClellan Chief Financial Officer
Slide 15: Q2 2019 Summary
Q2 2019 Summary $ millions, except EPS Q2 2019 Q2 2018 Q2 2019 Q2 2018 GAAP Non-GAAP Revenues 4,337 4,701 4,337 4,701 Operating income (loss) (644) (14) 1,011 1,238 Net income (loss) attributable to Teva (689) (176) 653 794 (0.63) (0.24) 0.60 0.78 Earnings (loss) per share ($) 1,092M 1,018M 1,093M 1
Slide 16: Q2 2019 Non-GAAP Adjustments
Q2 2019 Non-GAAP Adjustments $ millions Q2 2019 Highlights Legal settlements 646 Mainly related to opioids litigation Impairment items 609 Mainly U.S. intangible assets and product rights ($460M) Amortization 285 Quarterly run-rate Restructuring 47 Equity compensation plans 35 Contingent considerati
Slide 17: Q2 2019 Non-GAAP Summary
Q2 2019 Non-GAAP Summary $ billions, except EPS Q2 2019 Q2 2018 Change Revenues 4.3 4.7 (8%) 2.2 2.3 Gross profit (6%) 50.5% 49.7% 1.0 1.2 Operating income (18%) 23.3% 26.3% EBITDA 1.1 1.4 (18%) Net income 0.7 0.9 (24%) 0.60 0.78 EPS ($) (23%) 1,093M shares 1,021M shares Free cash flow* 0.2 0.6 (70%
Slide 18: Q2 2019 Foreign Exchange Impact
Q2 2019 Foreign Exchange Impact $ millions Q2 2019 Q2 2018 Diff FX Effect Diff net FX Revenues 4,337 4,701 (364) (125) (240) Operating income (644) (14) (630) (41) (588) GAAP Operating income 1,011 1,238 (227) (47) (181) Non-GAAP | 18 |
Slide 19: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 North America Segment 2,263 2,265 2,238 2,047 2,071 Generic Medicines 947 922 1,099 966 946 COPAXONE 464 463 356 208 274 AJOVY - - 3 20 23 TREANDA and BENDEKA 160 161 140 113 115 ProAir* 115 107 45 59 65 QVAR 30 36 9
Slide 20: Free Cash Flow
Free Cash Flow $ millions 704 559 522 360 168 Free cash flow* Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 CAPEX, Net** )129( (119) (208) (114) 11 Securitization re-class 526 402 363 362 384 Operating cash flow 162 421 367 112 (227) • | 20 | * Free Cash Flow includes cash flow generated from operating ac
Slide 21: Q2 2019 EBITDA to Free Cash Flow
Q2 2019 EBITDA to Free Cash Flow $ million (976) 1,144 (212) Net of Securitization, change in WC of $0.3bn, (177) mainly AR, net (26) (35) (108) (84) (345) 168 11 (384) 384 (227) Non-GAAP Finance Tax Minority Restructuring Legal Other Other WC Operating Securitization Capex, Free EBITDA expenses, pa
Slide 22: Liquidity
Liquidity $ billions 28.4 27.6 27.1 26.7 26.6 Net Debt 6.1 5.8 EBITDA MAT 5.3 4.9 4.6 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Net Debt / EBITDA MAT 4.63 4.79 5.10 5.45 5.72 Leverage 61% 61% 65% 64% 65% * According to Teva's credit agreement covenant ratio - adjusted ratio excludes EBITDA contributio
Slide 23: Reaffirming 2019 Non-GAAP Outlook
Reaffirming 2019 Non-GAAP Outlook $ billions, except EPS 2019 Outlook FY 2018 Revenues 17.0-17.4 18.9 Operating Income 3.8 – 4.2 4.7 EBITDA 4.4 – 4.8 5.3 EPS ($) 2.20-2.50 2.92 1,096M shares 1,024M shares Free Cash Flow* 1.6-2.0 3.7 • * Free Cash Flow includes cash flow generated from operating acti
Slide 24: teva
teva
Slide 25: Additional Information
Additional Information teva
Slide 26: Q2 2019 Revenues Trend
Q2 2019 Revenues Trend $ millions 4,701 4,529 4,559 321 (7%) 4,295 4,337 326 (7%) 377(8%) 317 (7%) 342 (8%) 789 (17%) 726 (16%) 740 (16%) 668 (16%) 741 (17%) 1,328 1,212 1,204 (28%) (27%) 1,264 1,183 (26%) (29%) (27%) 2,263 2,265 2,238 2,047 2,071 (48%) (50%) (49%) (48%) (48%) Other Activities Inter
Slide 27: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 COGS 2,362 2,268 2,231 2,145 2,149 S&M 634 634 768 602 621 R&D 281 243 289 255 271 G&A 292 284 330 280 286 Other income (106) (4) (5) (6) (0) Total 3,463 3,425 3,613 3,277 3,326 | 27 |
Slide 28: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions -218 -30 -3 24 1,238 1,011 Q2-18 North America Europe International Markets Other Activities Q2-19 | 28 |
Slide 29: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,238 31 (3%) 139 (11%) 1,104 35 (3%) 1,019 1,011 123 (11%) 946 21 (2%) 55 (5%) 28 (3%) 97 (10%) 346 (28%) 136 (13%) 114 (12%) 297 (27%) 403 253 (27%) )40%( 316 )31%( 722 (58%) 649 551 Other Activities (59%) 498 504 (58%) )49%( )50%( International Marke
Slide 30: Quarterly EBITDA
Quarterly EBITDA $ millions 1,387 1,254 1,091 1,154 1,144 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items) and excludes depreciation expenses | 30 |
Slide 31: Quarterly Free Cash Flow vs. Q1 2019
Quarterly Free Cash Flow vs. Q1 2019 $ millions -192 (1) 360 (492) 78 168 241 (118) 100 Q1 2019 Non-GAAP AR Annual Bonus Legal settlements Asset sales Other, mainly Q2 2019 Net Income Inventory | 31 |
Slide 32: Quarterly Free Cash Flow vs. Q2 2018
Quarterly Free Cash Flow vs. Q2 2018 $ millions -391 (206) 559 (195) 10 168 Q2 2018 Non-GAAP AR Other Q2 2019 Net Income | 32 |
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Jun 30, 2019 Dec 31, 2018 Diff Cash and Cash Equivalents 2.2 1.8 0.4 AR Trade 5.3 5.8 (0.6) Pre-paid Expenses and Other Current Assets 2.0 1.5 0.6 Inventory 4.8 4.7 0.1 Fixed Assets 6.7 6.9 (0.1) Intangible Assets 12.4 14.0 (1.6) Goodwill 24.9 24.9 (0.0) Other L
Slide 34: YTD 2019 Net Debt Movements
YTD 2019 Net Debt Movements $ billions -0.6 (-2%) 27.13 (0.14) (0.38) 26.56 (0.05) Net Debt December 31, Bond Repurchase Increase in FX & Other June 30, 2018 Cash Balance 2019 Gross Debt 28.9 28.7 Cash Balance 1.8 2.2 | 34 | * Net Debt = Gross Debt – Cash Balance
Slide 35: Current Debt Structure (as of June 30, 2019)
Current Debt Structure (as of June 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 Q2-19 Q2-18 $ millions, except EPS Q2-19 Q2-18 Change Margins Margins Revenues 4,337 4,701 (8%) COGS 2,443 56.3% 2,668 56.8% (8%) Gross profit 1,893 43.7% 2,033 43.2% (7%) R&D 276 6.4% 290 6.2% (5%) S&M 666 15.4% 682 14.5% (2%) G&A 296 6.8% 316 6.7% (6%) Legal settlem
Slide 37: YTD GAAP Income Statement
YTD GAAP Income Statement H1-19 H1-18 $ millions, except EPS H1-19 H1-18 Change Margins Margins Revenues 8,632 9,766 (12%) COGS 4,883 56.6% 5,418 55.5% (10%) Gross profit 3,749 43.4% 4,348 44.5% (14%) R&D 537 6.2% 607 6.2% (12%) S&M 1,313 15.2% 1,420 14.5% (7%) G&A 589 6.8% 645 6.6% (9%) Legal settl
Slide 38: YTD 2019 Non-GAAP Adjustments
YTD 2019 Non-GAAP Adjustments $ millions H1 2019 Highlights Impairment items* 972 Mainly U.S. intangible assets and product rights ($808M) Legal settlements 703 Mainly related to opioids reserve Amortization 568 Quarterly run-rate Restructuring 79 Equity compensation plans 69 Contingent consideratio
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