01—Abstract
Summary
Summary of the 10-Q filed November 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Teva Pharmaceutical Industries Limited reported third-quarter 2024 revenues of $4,332 milliona, an increase of 13% in U.S. dollars (15% in local currency), compared with $3,850 million in the third quarter of 2023.
Gross profit rose to $2,148 millionb, with a gross margin of 49.6% versus 48.1% a year earlier. However, the company posted an operating loss of $51 million, compared with operating income of $344 million in the prior-year quarter, mainly due to a $600 million goodwill impairment related to its Teva API reporting unit and $450 million in legal settlements and loss contingencies. Net loss attributable to Teva was $437 million, or $0.39 per diluted share, versus net income of $69 million in the third quarter of 2023.
For the first nine months of 2024, revenues were $12,315 millionc, up 8% from the prior-year period, and the net loss attributable to Teva was $1,422 million, or $1.26 per share. Results were weighed down by $1,000 million in goodwill impairments, $931 million in other asset impairments, restructuring and other items, $638 million in legal settlements, and a $648 million income tax expense that includes a $495 million tax item tied to a settlement with the Israeli Tax Authorities. Total debt was $18,980 million at September 30, 2024, down from $19,833 million at December 31, 2023, and cash and cash equivalents were $3,319 million.
Third-quarter operating cash flow was $693 milliond, and free cash flow, as the company defines it, was $922 million. The filing also highlights ongoing risks. Management concluded that disclosure controls were not effective because a material weakness related to the contingent consideration liability has not been remediated.
The company also disclosed that it intends to divest its API business, expected to be completed in the first half of 2025, and that it currently cannot repurchase shares or pay dividends due to its accumulated deficit. After quarter-end, the European Commission announced a final decision in the COPAXONE antitrust case with a fine of approximately $500 million (462.6 million euros), which Teva intends to appeal.
02—Key points
Key Highlights
- Third-quarter 2024 revenues of $4,332 million rose 13% in U.S. dollars (15% in local currency) versus $3,850 million in the third quarter of 2023, driven mainly by generic products across all segments and AUSTEDO in the United States.
- Gross profit margin was 49.6% in the third quarter of 2024, compared with 48.1% in the third quarter of 2023, mainly due to a favorable product mix.
- The company recorded an operating loss of $51 million in the third quarter, versus operating income of $344 million a year earlier, after a $600 million goodwill impairment for the Teva API reporting unit and $450 million in legal settlements and loss contingencies.
- Net loss attributable to Teva was $437 million ($0.39 per diluted share) in the third quarter, compared with net income of $69 million in the prior-year quarter.
- For the nine months, net loss attributable to Teva was $1,422 million ($1.26 per share), including a $495 million tax item related to the settlement with the Israeli Tax Authorities.
- Total debt declined to $18,980 million at September 30, 2024 from $19,833 million at December 31, 2023, after $956 million of 6% senior notes were repaid at maturity in April 2024; no amounts were outstanding under the $1.8 billion revolving credit facility.
- A material weakness in internal control over financial reporting related to the contingent consideration liability was not remediated as of September 30, 2024, and disclosure controls were concluded to be not effective.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2024, Teva Pharmaceutical Industries lost $0.10.
- Revenue$4.33B100.0%
- Cost of revenue−$2.18B50.4%
- Gross profit$2.15B49.6%
- Operating costs−$2.20B50.8%
- Operating income−$51.0M1.2%
- Interest, other & tax−$386.0M8.9%
- Net income−$437.0M10.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 6, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $4.33B$3.85B | +12.5% |
| Cost of Revenue | $2.18B$2.00B | +9.2% |
| Gross Profit | $2.15B$1.85B | +16.0% |
| Operating Income | -$51.00M$344.00M | −114.8% |
| Net Income | -$437.00M$69.00M | −733.3% |
| EPS (Basic) | $-0.39$0.06 | −750.0% |
| EPS (Diluted) | $-0.39$0.06 | −750.0% |
| Shares Outstanding (Basic) | 1.13B1.12B | +1.1% |
| Shares Outstanding (Diluted) | 1.13B1.14B | −0.2% |
05—Questions
Frequently Asked Questions
Why did Teva swing from operating income to an operating loss in the third quarter of 2024?
Operating loss was $51 million in the third quarter of 2024, compared with operating income of $344 million in the third quarter of 2023. The filing attributes the decrease mainly to a $600 million goodwill impairment charge related to the Teva API reporting unit and higher legal settlements and loss contingencies of $450 million, partially offset by higher gross profit.
What drove the legal settlement and loss contingency charges?
The third-quarter 2024 charges were mainly related to a European Commission decision in its antitrust investigation into COPAXONE and an update to the estimated opioid settlement provision, including the settlement agreement with the city of Baltimore. The filing also states that on October 31, 2024, the European Commission announced a final COPAXONE decision with a fine of approximately $500 million (462.6 million euros), which Teva intends to appeal.
Is Teva planning to sell any part of its business?
Yes. On January 31, 2024, Teva announced its intention to divest its API business, including its R&D, manufacturing and commercial activities, through a sale. The divestment is expected to be completed in the first half of 2025, but the filing states there can be no assurance regarding the timing, structure or completion of the divestiture.
Can Teva return cash to shareholders or buy back shares?
Not currently. The filing states that Teva did not repurchase any shares in the third quarter of 2024 and that it currently cannot conduct share repurchases or pay dividends due to its accumulated deficit. Teva has not paid dividends on its ordinary shares or ADSs since December 2017.
How is Teva's liquidity position at the end of the third quarter?
Cash and cash equivalents were $3,319 million at September 30, 2024, compared with $3,226 million at December 31, 2023. Third-quarter operating cash flow was $693 million, and free cash flow was $922 million as defined by the company. Short-term liquidity is supported by a $1.8 billion revolving credit facility under which no amounts were outstanding as of September 30, 2024 or the filing date.
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