01—Abstract
Summary
Summary of the 10-K filed February 10, 2023. Cited figures are marked; the original filing is the authoritative source.
Teva Pharmaceutical Industries Limited reported 2022 net revenues of $14,925 milliona, a decrease of 6% in U.S. dollars (1% in local currency) compared to 2021, driven by lower COPAXONE and certain respiratory product sales in North America and Europe, and lower generic and BENDEKA/TREANDA revenues in North America.
Gross profit was $6,973 millionb, with gross margin of 46.7% versus 47.8% in 2021. The company reported an operating loss of $2,099 million, compared to operating income of $1,716 million in 2021, driven mainly by a $2,045 million goodwill impairment charge and $2,082 million in legal settlements and loss contingencies, primarily related to the remaining opioid cases. Net loss attributable to Teva was $2,353 million, or a diluted loss per share of $2.12, compared to net income of $417 million and diluted EPS of $0.38 in 2021.
Cash flow from operating activities rose to $1,590 millionc from $798 million, mainly due to a U.S. securitization facility entered into in November 2022. Free cash flow, as defined by the company, was $2,243 million. Total debt decreased to $21,212 million from $23,043 million, and total equity fell to $8,691 million from $11,244 million.
The company said it was in compliance with its financial ratio covenants as of December 31, 2022, and its RCF leverage covenant was amended in February 2023. Teva has not paid dividends since December 2017.
The filing also highlights ongoing exposure to the opioid nationwide settlement, which is contingent on sufficient participation, as well as a pending U.S. criminal indictment of Teva USA under the Sherman Act and a European Commission Statement of Objections regarding COPAXONE. Innovative medicines AUSTEDO and AJOVY continued to grow, with AUSTEDO revenues up 20%d and AJOVY revenues up 24% in North America.
02—Key points
Key Highlights
- Net revenues of $14,925 million, down 6% in U.S. dollars and 1% in local currency versus 2021.
- Operating loss of $2,099 million, compared with operating income of $1,716 million in 2021, driven by a $2,045 million goodwill impairment and $2,082 million in legal settlements and loss contingencies.
- Net loss attributable to Teva of $2,353 million, or $(2.12) diluted per share, versus net income of $417 million ($0.38 per share) in 2021.
- Operating cash flow increased to $1,590 million from $798 million, mainly due to a November 2022 U.S. securitization facility; free cash flow was $2,243 million.
- Total debt was $21,212 million at year-end 2022, down from $23,043 million, after $1,369 million of senior notes were repaid at maturity.
- AUSTEDO (up 20%) and AJOVY (up 24%) grew in North America, while COPAXONE (down 33%) and generic products (down 6%) declined.
- Opioid nationwide settlement contingent on sufficient participation; a criminal indictment against Teva USA under the Sherman Act and a European Commission Statement of Objections on COPAXONE remain pending risks.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Teva Pharmaceutical Industries lost $0.16.
- Revenue$14.93B100.0%
- Cost of revenue−$7.95B53.3%
- Gross profit$6.97B46.7%
- Operating costs−$9.17B61.4%
- Operating income−$2.20B14.7%
- Interest, other & tax−$249.0M1.7%
- Net income−$2.45B16.4%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 10, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $14.93B$15.88B | −6.0% |
| Cost of Revenue | $7.95B$8.28B | −4.0% |
| Gross Profit | $6.97B$7.59B | −8.2% |
| R&D Expenses | $98.00M— | — |
| Operating Income | -$2.20B$1.72B | −228.0% |
| Interest Expense | $930.00M$891.00M | +4.4% |
| Net Income | -$2.45B$417.00M | −686.6% |
| EPS (Basic) | $-2.20$0.38 | −678.9% |
| EPS (Diluted) | $-2.20$0.38 | −678.9% |
| Shares Outstanding (Basic) | 1.11B1.10B | +0.7% |
| Shares Outstanding (Diluted) | 1.11B1.11B | +0.3% |
05—Questions
Frequently Asked Questions
Why did Teva report a net loss in 2022 after net income in 2021?
The net loss was mainly driven by a $2,045 million goodwill impairment charge and $2,082 million in legal settlements and loss contingencies, mainly related to updates of the estimated settlement provision for the remaining opioid cases. These were partially offset by a $638 million income tax benefit on a pre-tax loss of $3,065 million.
How did Teva's revenues and margins change in 2022?
Revenues fell 6% in U.S. dollars to $14,925 million, mainly due to lower COPAXONE and respiratory product sales and lower North America generic revenues. Gross margin declined to 46.7% from 47.8%, mainly due to lower COPAXONE and respiratory revenues, partially offset by higher AUSTEDO revenues and a favorable generic mix in Europe.
What drove the improvement in operating cash flow?
Operating cash flow was $1,590 million in 2022 versus $798 million in 2021. The filing attributes the increase mainly to the sale of accounts receivables under the U.S. securitization facility entered into in November 2022, and lower collections remitted under the EU securitization program, partially offset by higher inventory and higher opioid-related legal settlement payments.
What are the main legal risks flagged in the filing?
Key risks include the nationwide opioid settlement, which depends on sufficient participation by states, subdivisions and Tribes, with additional trials expected in 2023 if it is not finalized; a criminal indictment charging Teva USA with Sherman Act violations, which could result in monetary penalties and debarment if there is a conviction; and a European Commission Statement of Objections alleging anti-competitive practices related to COPAXONE.
How is Teva's debt position and liquidity?
Total debt was $21,212 million at December 31, 2022, and the financial leverage ratio was 71%. Cash, cash equivalents and investments totaled $2,817 million. Teva had a $1.8 billion unsecured sustainability-linked revolving credit facility, with no amounts outstanding at year-end, and its leverage covenant was amended in February 2023. The company stated it was in compliance with all applicable financial ratios as of December 31, 2022.
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