01—Abstract
Summary
Summary of the 10-K filed February 12, 2024. Cited figures are marked; the original filing is the authoritative source.
Teva Pharmaceutical Industries Limited reported 2023 revenues of $15,846 milliona, up 6% in U.S. dollars (7% in local currency), compared to 2022.
The increase was mainly driven by a $500 millionb upfront payment received in connection with the collaboration on its anti-TL1A asset with Sanofi, higher revenues from generic products in International Markets and Europe, growth in AUSTEDO and AJOVY, and higher Anda revenues, partially offset by lower COPAXONE, API sales and BENDEKA/TREANDA revenues. The company reported an operating income of $433 million (compared to an operating loss of $2,197 million in 2022) and a net loss attributable to Teva of $559 million, or diluted loss per share of $0.50. Results were affected by a $700 million goodwill impairment in the International Markets reporting unit, $1,043 million in legal settlements and loss contingencies, and $718 million in other asset impairments, restructuring and other items.
Total debt was $19,833 millionc at December 31, 2023, down from $21,212 million a year earlier, and cash and cash equivalents rose to $3,226 million. Operating cash flow was $1,368 million, and the company reported free cash flow of $2,387 million, a figure it defines to include beneficial interest collected under its EU securitization program. Management describes its Pivot to Growth strategy, launched in May 2023, which centers on AUSTEDO, AJOVY, UZEDY and the biosimilar pipeline, and includes an intention to divest the API business in the first half of 2025.
The filing also discloses a material weakness in internal control over financial reporting related to the contingent consideration liability and related expenses for estimated future royalty payments. This led to a revision of previously issued 2022 financial statements and certain 2023 interim periods. The company has not paid dividends since December 2017, and it disclosed a deferred prosecution agreement with the DOJ, an opioids nationwide settlement of up to $4.25 billiond payable over 13 years, and a $1 billion-plus damages claim in the DOJ patient assistance program case.
02—Key points
Key Highlights
- Revenues of $15,846 million in 2023, up 6% in U.S. dollars or 7% in local currency, including a $500 million upfront payment from the anti-TL1A collaboration with Sanofi.
- Operating income of $433 million in 2023, compared with an operating loss of $2,197 million in 2022, which had included $2,045 million of goodwill impairment charges.
- Net loss attributable to Teva of $559 million, or $0.50 per diluted share, compared with a net loss of $2,446 million, or $2.20 per share, in 2022.
- Goodwill impairment of $700 million related to the International Markets reporting unit, and legal settlements and loss contingencies expense of $1,043 million in 2023.
- Total debt reduced to $19,833 million from $21,212 million, with cash and cash equivalents of $3,226 million at year-end 2023.
- Operating cash flow of $1,368 million in 2023, down from $1,590 million in 2022; the company reported free cash flow of $2,387 million on its own definition.
- Management identified a material weakness in internal control over financial reporting related to the contingent consideration liability, which led to revision of prior-period financial statements.
- The company intends to divest its API business in the first half of 2025 as part of its Pivot to Growth strategy.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2023, Teva Pharmaceutical Industries lost $0.04.
- Revenue$15.85B100.0%
- Cost of revenue−$8.20B51.8%
- Gross profit$7.64B48.2%
- Operating costs−$7.21B45.5%
- Operating income$433.0M2.7%
- Interest, other & tax−$992.0M6.3%
- Net income−$559.0M3.5%
Where FY2023 revenue went
$15.85B- Cost of revenue: $8.20B, 52% of revenue
- Operating costs: $7.21B, 46% of revenue
- Operating income: $433.0M, 2.7% of revenue
Kept 2.7% as operating incomeOperating income $433.0M · 2.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 12, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $15.85B$14.93B | +6.2% |
| Cost of Revenue | $8.20B$7.95B | +3.1% |
| Gross Profit | $7.64B$6.97B | +9.6% |
| Operating Income | $433.00M-$2.20B | +119.7% |
| Interest Expense | $1.03B$930.00M | +10.6% |
| Net Income | -$559.00M-$2.45B | +77.1% |
| EPS (Basic) | $-0.50$-2.20 | +77.3% |
| EPS (Diluted) | $-0.50$-2.20 | +77.3% |
| Shares Outstanding (Basic) | 1.12B1.11B | +0.8% |
| Shares Outstanding (Diluted) | 1.12B1.11B | +0.8% |
05—Questions
Frequently Asked Questions
What drove the increase in Teva's 2023 revenues?
Revenues rose to $15,846 million, up 6% in U.S. dollars or 7% in local currency. The filing attributes the increase mainly to the $500 million upfront payment from the anti-TL1A collaboration with Sanofi, higher generic product revenues in International Markets and Europe, growth in AUSTEDO and AJOVY, the sale of certain product rights in Europe, and higher Anda revenues. These were partially offset by lower COPAXONE, API sales to third parties, BENDEKA and TREANDA revenues, and North America generic products.
Why did Teva swing from an operating loss in 2022 to operating income in 2023?
The filing states that 2022 included goodwill impairment charges of $2,045 million and legal settlements and loss contingencies of $2,082 million, while 2023 included a $700 million goodwill impairment and $1,043 million in legal settlements and loss contingencies. Operating income was $433 million in 2023 compared with an operating loss of $2,197 million in 2022, and the increase was mainly attributed to the lower goodwill impairment and legal charges and the higher gross profit.
What is the status of Teva's debt and liquidity?
Total debt was $19,833 million at December 31, 2023, versus $21,212 million a year earlier. The decrease reflected $1,646 million of senior notes repaid at maturity, partially offset by currency effects. Cash and cash equivalents rose to $3,226 million from $2,801 million. The company had no amounts outstanding under its $1.8 billion revolving credit facility as of December 31, 2023 and as of the date of the filing. The filing states the company's financial leverage was 71% at year-end.
What is the Pivot to Growth strategy?
Introduced in May 2023, the Pivot to Growth strategy has four pillars: delivering on growth engines AUSTEDO, AJOVY, UZEDY and the late-stage biosimilar pipeline; stepping up innovation; sustaining the generics business; and focusing the business by optimizing its portfolio and manufacturing footprint. The company intends to divest its API business in the first half of 2025.
What material weakness did Teva disclose, and what are the implications?
Management concluded that the company did not maintain effective control over the contingent consideration liability and related expenses tied to estimated future royalty payments. The weakness led to revisions of the 2022 consolidated financial statements and certain 2022 and 2023 quarterly periods, affecting items such as other asset impairments, restructuring and other items, net income, and other taxes and long-term liabilities. The filing says remediation involves defining responsibilities, enhancing reconciliation procedures, and adding monitoring controls, and that remediation will be complete only once those controls operate effectively for a sufficient period.
06—Continue