Teva Pharmaceutical Industries Limited · TASE:TEVA

Teva Pharmaceutical Industries — Q1 2018 Earnings Presentation

34 slides from Teva Pharmaceutical Industries's earnings presentation, May 3, 2018

  1. Slide 1: Teva Pharmaceutical Industries Ltd. Q1 2018

    Teva Pharmaceutical Industries Ltd. Q1 2018 May 3, 2018

  2. 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

  3. Slide 3: Kåre Schultz, Chief Executive Officer

    Kåre Schultz Chief Executive Officer

  4. Slide 4: Strong Start to 2018

    4 Strong Start to 2018  Q1’18 figures include:  Revenues of $5.1 billion  GAAP EPS of $1.03 and non-GAAP EPS of $0.94  Free cash flow of $1.9 billion  Restructuring program on schedule  Teva Gx approvals and launches on track  Copaxone® maintaining share in the U.S.  AUSTEDO® continues to gr

  5. Slide 5: Q1 2018 Summary

    5 Q1 2018 Summary $ billion, except EPS Q1 2018 Q1 2017 Q1 2018 Q1 2017 GAAP Non-GAAP Revenues 5,065 5,650 5,065 5,650 Operating income 1,525 895 1,435 1,621 Net income attributable to Teva 1,120 645 1,019 1,144 Earnings per share ($) 1.03 0.57 0.94 1.06 1,020M shares 1,017M shares 1,020M share 1,01

  6. Slide 6: Restructuring Plan On Track

    6 Restructuring Plan On Track  On track to achieve $3b in spend base reduction Cost base  More than half in 2018; full amount by end of 2019  FTEs reduced by ~6,200 to ~46K since the start of the restructuring plan Headcount  On track to achieve HC reduction target of 14,000 over next 2 years Fa

  7. Slide 7: U.S. Generics Update

    7 U.S. Generics Update Market  U.S. leader in generic market in total prescriptions and new prescriptions, with approximately 583 million total Share prescriptions, representing 15.2% of total U.S. generic prescriptions  Largest generic pipeline Pipeline  325 product applications awaiting FDA app

  8. Slide 8: Copaxone Maintaining Share in the U.S.

    8 Copaxone® Maintaining Share in the U.S. Total Glatiramer Acetate Weekly TRx Volume Commentary Copaxone 40mg TRx market share 85% vs. Gx 15% Total GA TRx COPAXONE Brand TRx Glatopa 20mg TRx Mylan GA TRx 16,000 National formulary access remains stable for 14,000 Copaxone 40mg ~90% 12,000 10,000 C

  9. Slide 9: AUSTEDO continues to grow

    9 AUSTEDO® continues to grow AUSTEDO® Unique Patients Dispensed Commentary  Commercial launch for chorea associated with 3,500 3,310 Huntington disease (HD) in Q2’17 and for Tardive 2,900 Dyskinesia (TD) in Q3’17 3,000  Q1’18 revenue $30 million 2,500 Patient Dispenses  ~3,000 patients currently

  10. Slide 10: fremanezumab

    10 fremanezumab  We do not expect to receive FDA approval for our BLA for fremanezumab by the June 16th PDUFA date  We expect the pre-approval inspection to take place within the coming months and expect U.S. FDA approval and launch before the end of 2018  European Medicines Agency (EMA) accepted

  11. Slide 11: Michael McClellan, Chief Financial Officer

    Michael McClellan Chief Financial Officer

  12. Slide 12: Q1 2018 Summary

    12 Q1 2018 Summary $ millions, except EPS Q1 2018 Q1 2017 Q1 2018 Q1 2017 GAAP Non-GAAP Revenues 5,065 5,650 5,065 5,650 Operating income 1,525 895 1,435 1,621 Net income attributable to Teva 1,120 645 1,019 1,144 Earnings per share ($) 1.03 0.57 0.94 1.06 1,020M Shares 1,017M shares 1,020M shares 1

  13. Slide 13: Q1 2018 Non-GAAP Adjustments

    13 Q1 2018 Non-GAAP Adjustments $ millions Q1 2018 Highlights US intangible assets, Rimsa goodwill impairment, termination of PGT Impairment 706 Healthcare JV, production sites slated for closure Amortization 310 Restructuring 247 Financial expenses 68 Early redemption fees Other items 104 Acquisiti

  14. Slide 14: Q1 2018 Non-GAAP Summary

    14 Q1 2018 Non-GAAP Summary $ billions, except EPS Q1 2018 Q1 2017 Change Revenues 5.1 5.6 (10%) Gross profit 2.7 3.2 (18%) 52.3% 56.9% Operating income 1.4 1.6 (11%) 28.3% 28.7% EBITDA 1.6 1.8 (10%) Net income 1.0 1.1 (11%) EPS ($) 0.94 1.06 (12%) 1,020M shares 1,017M shares Free cash flow* 1.9 0.3

  15. Slide 15: Quarterly Revenues

    15 Quarterly Revenues $ millions -566 26 39 -29 -295 240 5,650 5,065 Q1 - 17 NA Europe Growth Other Divestment FX Q1 - 18 Markets Activities & Other *All data are net of the impact of foreign exchange fluctuations. ** Divestment & Other mainly includes Women’s Health divestment , closure of Hungary

  16. Slide 16: Quarterly Non-GAAP Operating Income

    16 Quarterly Non-GAAP Operating Income $ millions 11 90 -265 -156 135 1,621 1,435 Q1-17 NA Europe Growth Other Divestment Q1-18 Markets Activities & Other Divestment & Other mainly includes Women’s Health divestment., closure of Hungary distribution activities, deconsolidation of Venezuela and proce

  17. Slide 17: Quarterly EBITDA

    17 Quarterly EBITDA $ billions 1.77 1.75 1.63 1.59 1.53 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items) and excludes depreciation expenses.

  18. Slide 18: Copaxone revenues and US market shares

    18 Copaxone® revenues and US market shares $ millions / % market share 970 1,023 987 821 645 1,200 35% 30% 1,000 42 35 34 138 152 150 25% 800 45 155 20% 30 600 153 15% 400 842 802 782 10% 622 462 200 5% 0 0% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 US EU ROW US TRx MS* Copaxone® family US TRx MS* Copaxone® 40m

  19. Slide 19: Free Cash Flow

    19 Free Cash Flow $ millions 1,894 Free Cash Flow* 920 934 567 272 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 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

  20. Slide 20: Q1 2018 Debt Movement

    20 Q1 2018 Debt Movement $ billions Gross Debt: -$1.7b Net Debt: -$2.2b 4.4 -3.8 Gross Debt 32.5 Cash 1.0 -2.7 30.8 0.3 1.4 Net Debt* 31.5 29.3 Cash balance increase $0.4b Q4 New Bonds USD & JPY USD & EUR FX Impact & Q1 2017 Issuance Term Loans Bonds Other, Net 2018 Redemption * Net Debt = Gross Deb

  21. Slide 21: Liquidity

    21 Liquidity $ billions 33.7 34.5 34.0 Net Debt 31.5 29.3 7.5 7.5 7.2 EBITDA MAT 6.7 6.5 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Net Debt / EBITDA MAT 4.51 4.57 4.70 4.71 4.51 Net Debt / EBITDA MAT – adjusted ratio for Covenants* 4.82 4.68 Leverage 49% 54% 53% 63% 60% * According to Teva's credit ag

  22. Slide 22: 2018 Financial Outlook

    2018 Financial Outlook teva

  23. Slide 23: 2018 Non-GAAP Financial Outlook

    23 2018 Non-GAAP Financial Outlook 2018 Outlook – May 2018 Outlook – 2018 Update Original (Feb 2018) Revenues 18.5-19.0 18.3-18.8 ($ billions) Non-GAAP Operating income 4.2-4.5 4.0-4.3 ($ billions) Non-GAAP EBITDA 4.9-5.2 4.7-5.0 ($ billions) Weighted average number of shares 1,030 1,030 (in million

  24. Slide 24: Q&A

    Q&A teva

  25. Slide 25: Additional Information

    Additional Information teva

  26. Slide 26: Revenues by Activity and Geographical Area

    26 Revenues by Activity and Geographical Area Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 North America segment Generic Medicines 978 931 1,316 1,429 1,415 1,331 1,233 1,224 1,088 Copaxone 837 968 892 846 797 859 819 641 476 Treanda and Bendeka 155 207 148 150 156 163 179 158 181 ProAir 17

  27. Slide 27: Quarterly GAAP Income Statement

    27 Quarterly GAAP Income Statement $ millions, except EPS Q1-18 Q1-18 Q1-17 Q1-17 Change Margins Margins Revenues 5,065 5,650 (10%) COGS 2,717 53.6% 2,811 49.8% (3%) Gross profit 2,348 46.4% 2,839 50.2% (17%) R&D 317 6.3% 432 7.6% (27%) S&M 771 15.2% 958 17.0% (20%) G&A 329 6.5% 366 6.5% (10%) Legal

  28. Slide 28: Quarterly Non-GAAP Income Statement

    28 Quarterly Non-GAAP Income Statement $ millions, except EPS Q1-18 Q1-18 Q1-17 Q1-17 Change Margins Margins Revenues 5,065 5,650 (10%) COGS 2,414 47.7% 2,434 43.1% (1%) Gross profit 2,651 52.3% 3,216 56.9% (18%) R&D 289 5.7% 420 7.4% (31%) S&M 715 14.1% 894 15.8% (20%) G&A 322 6.4% 353 6.2% (9%) Ot

  29. Slide 29: Q1 2018 Foreign Exchange Impact

    29 Q1 2018 Foreign Exchange Impact $ millions Q1 2018 Q1 2017 Diff FX Effect Diff net FX Revenues 5,065 5,650 (585) 240 (825) Operating income 1,525 895 630 37 593 GAAP Operating income 1,435 1,621 (185) 46 (232) Non-GAAP

  30. Slide 30: Quarterly Revenue Breakdown by Segment

    30 Quarterly Revenue Breakdown by Segment $ millions 5,650 351 (6%) 5,065 Other 718 (13%) 342 (7%) Growth Markets 750 (15%) Europe 1,341 (24%) NA 1,442 (28%) 3,240 (57%) 2,531 (50%) Q1-17 Q1-18 Percentages may not add up to 100% due to rounding.

  31. Slide 31: Quarterly Non-GAAP Operating Income

    31 Quarterly Non-GAAP Operating Income $ millions 1,621 Other 40 (2%) 7 (0%) 1,435 Growth Markets 268 (17%) 21 (1%) 122 (9%) Europe NA 377 (26%) 1,306 (81%) 915 (64%) Q1-17 Q1-18 Profit is presented on a non-GAAP basis. Percentages may not add up to 100% due to rounding.

  32. Slide 32: Balance Sheet

    32 Balance Sheet Mar 31, Dec 31, $ billions Diff 2018 2017 Cash and Cash Equivalents 1.4 1.0 0.5 Other Financial assets 0.1 0.1 0.0 AR Trade 6.3 7.1 -0.8 Pre-paid Expenses and Other Current Assets 1.9 2.4 -0.5 Inventory 5.1 4.9 0.2 Fixed Assets 7.4 7.7 -0.3 Goodwill 28.5 28.4 0.1 Intangible Assets 1

  33. Slide 33: Q1-18 Cash Flow Bridge

    33 Q1-18 Cash Flow* Bridge Net of Securitization, no material change in WC $ millions +875 162 131 46 555 444 913 150 1,894 1,496 1,019 Net income Depreciation Legal Restructuring Other Working capital Operating Securitization Capex , Free non-GAAP settl. cash flow reclass Net cash flow • *Free Cash

  34. Slide 34: Updated Debt Maturities

    34 Updated Debt Maturities $ millions 6,000 New EUR New USD Prepayments JPY Term Loans CHF EUR USD 5,000 4,000 3,000 2,000 1,000 0 18 19 20 21 22 23 24 25 26 27 28 … 36 … 46

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