Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) today reported
results for the quarter ended March 31, 2016.
Q1 2016 Revenues $4.81
billion Cash flow from Operations $1.38 billion Non-GAAP EPS $1.20
GAAP EPS $0.62
- Non-GAAP EPS adjusted to exclude
December 2015 equity offerings was $1.36, in line with results in
the first quarter of 2015.
- Exchange rate fluctuations reduced
revenues by $107 million and non-GAAP operating profit by $30
million.
- Second quarter 2016 revenues are
expected to be $4.7-$4.9 billion; non-GAAP EPS expected to be
$1.16-$1.20; non-GAAP EPS, adjusted to exclude the impact of the
December 2015 equity offerings, is expected to be $1.32-$1.36.
- Our guidance for the second quarter of
2016 does not include any Actavis Generics revenues or profit. We
expect to close the Actavis Generics acquisition in June 2016.
“We start 2016 with solid performance across the business,
strong financial results and the achievement of several key
milestones. Generics remains a core contributor to our performance
despite no major launches in the U.S. this quarter as we had in
the first quarter 2015 with continuous operational and
financial improvement across the business. We finalized our
acquisition of Rimsa and completed the business venture in Japan
with Takeda. We continue to make important progress in our
specialty business where we see great promise,” stated Erez
Vigodman, President & CEO of Teva. “Looking forward, we have
several upcoming approvals and key clinical milestones in our
pipeline and of course the much anticipated close of Actavis
Generics. We are excited to be in the final stages of completing
the acquisition of Actavis Generics, which will enable us to
further realize the enormous potential in the growing global
generics universe and deliver the benefits of this transaction to
our stockholders, customers, patients and healthcare systems around
the world.”
First Quarter 2016
Results
Revenues in the first quarter of 2016 amounted to $4.8
billion, down 3% compared to the first quarter of 2015. Excluding
the impact of foreign exchange fluctuations, revenues were down
1%.
Exchange rate differences (net of profits from certain
hedging transactions) between the first quarter of 2016 and the
first quarter of 2015 decreased revenues by $107 million, and both
non-GAAP and GAAP operating income by $30 million.
Non-GAAP gross profit was $3.0 billion in the first
quarter of 2016, down 2% from the first quarter of 2015. Non-GAAP
gross profit margin was 62.7% in the first quarter of 2016,
compared to 61.5% in the first quarter of 2015. GAAP gross profit
was $2.8 billion in the first quarter of 2016, down 2% compared to
the first quarter of 2015. GAAP gross profit margin was 58.0% in
the quarter, compared to 56.9% in the first quarter of 2015.
Research and Development (R&D) expenses (excluding
equity compensation expenses and purchase of in-process R&D) in
the first quarter of 2016 amounted to $375 million, compared to
$328 million in the first quarter of 2015. R&D expenses were
7.8% of revenues in the quarter, compared to 6.6% in the first
quarter of 2015. R&D expenses related to our generic medicines
segment increased 23% to $136 million, compared to $111 million in
the first quarter of 2015. The increase is mainly due to increased
development of complex generic products such as sterile and
respiratory medicines. R&D expenses related to our specialty
medicines segment increased 7% to $229 million, compared to $215
million in the first quarter of 2015, mainly due to increased
development costs related to assets acquired through the Labrys and
Auspex transactions.
Selling and Marketing (S&M) expenses (excluding
amortization of purchased intangible assets and equity compensation
expenses) amounted to $821 million, or 17.1% of revenues, in the
first quarter of 2016, compared to $908 million, or 18.2% of
revenues, in the first quarter of 2015. S&M expenses related to
our generic medicines segment decreased 25% to $279 million,
compared to $374 million in the first quarter of 2015. The decrease
was mainly due to reduced royalties related to our sales of
budesonide (Pulmicort®) in the United States. S&M expenses
related to our specialty medicines segment decreased 6% to $457
million, compared to $486 million in the first quarter of 2015.
General and Administrative (G&A) expenses (excluding
equity compensation expenses) amounted to $294 million in the first
quarter of 2016, or 6.1% of revenues, compared to $293 million and
5.9% in the first quarter of 2015.
Quarterly non-GAAP operating income was $1.5 billion,
similar to the first quarter of 2015. Quarterly GAAP operating
income was $1.2 billion in the first quarter of 2016, an increase
of 56% compared to $0.7 billion in the first quarter of 2015.
We calculate EBITDA as non-GAAP operating income (which excludes
amortization and certain other items) plus depreciation expenses
for the period. In the first quarter of 2016, depreciation amounted
to $108 million, compared to $113 million in the first quarter of
2015. EBITDA for the first quarter of 2016 amounted to $1.6
billion, down 1% compared to the first quarter of 2015.
Non-GAAP financial expenses amounted to $52 million in
the first quarter of 2016, compared to $49 million in the first
quarter of 2015. GAAP financial expenses for the first quarter of
2016 amounted to $298 million, compared to $192 million in the
first quarter of 2015. The higher expenses, on a GAAP basis, were
mainly the result of a $246 million impairment of net monetary
assets following the devaluation in Venezuela.
The provision for non-GAAP income taxes for
the first quarter of 2016 amounted to $302 million on pre-tax
non-GAAP income of $1.5 billion, for a quarterly tax rate of 21%.
The provision for non-GAAP income taxes in the first quarter of
2015 was $312 million on pre-tax non-GAAP income of $1.5 billion,
for a quarterly tax rate of 21%. GAAP income tax expenses
for the first quarter of 2016 amounted to $228 million or 26%, on
pre-tax income of $867 million. In the first quarter of 2015, the
provision for income taxes amounted to $104 million or 19%, on
pre-tax income of $557 million. While the tax rate may fluctuate
quarterly, we expect our annual tax rate for 2016 to be similar to
that for 2015.
Non-GAAP net income attributable to ordinary shareholders
and non-GAAP diluted EPS were $1.2 billion and $1.20,
respectively, in the first quarter of 2016, compared to $1.2
billion and $1.36 in the first quarter of 2015. Non-GAAP EPS
adjusted to exclude the December 2015 equity offerings was $1.36.
GAAP net income attributable to ordinary shareholders and
GAAP diluted EPS were $570 million and $0.62, respectively,
in the first quarter of 2016, compared to $446 million and $0.52,
respectively, in the first quarter of 2015.
Non-GAAP information: Net non-GAAP adjustments in the
first quarter of 2016 amounted to $536 million. Non-GAAP net income
and non-GAAP EPS for the quarter were adjusted to exclude the
following items:
- Financial expenses of $246 million
related to the impairment of our net monetary assets in Venezuela
following a change in exchange rates;
- Amortization of purchased intangible
assets totaling $189 million, of which $178 million is included in
cost of goods sold and the remaining $11 million in selling and
marketing expenses;
- Acquisition and related expenses of
$101 million;
- Equity compensation of $24
million;
- Restructuring expenses of $19
million;
- Impairment of long-lived assets of $13
million;
- Other non-GAAP items of $43
million;
- Income from legal settlements and loss
contingencies of $25 million; and
- Corresponding tax benefit of $74
million.
Teva believes that excluding such items facilitates investors'
understanding of its business and financial results. See the
attached tables for a reconciliation of the U.S. GAAP results to
the adjusted non-GAAP figures.
Cash flow from operations generated during the first
quarter of 2016 amounted to $1.4 billion, as in the first quarter
of 2015. Free cash flow, excluding net capital expenditures,
amounted to $1.2 billion, similar to the first quarter of 2015.
Cash and investments at March 31, 2016 decreased to $7.2
billion, compared to $8.4 billion at December 31, 2015, mainly due
to the funding of the Rimsa acquisition.
For the first quarter of 2016, the weighted average
outstanding shares for the fully diluted earnings per share
calculation were 979 million on a non-GAAP basis and 920 million on
a GAAP basis. The average weighted diluted shares outstanding used
for the fully diluted share calculation for the first quarter of
2015 were 859 million shares, on both a non-GAAP and GAAP basis.
The increase in the number of shares resulted from our December
2015 equity offerings, with the number of shares on a non-GAAP
basis including the potential dilution resulting from our recently
issued mandatory convertible preferred shares, which had a dilutive
effect on our non-GAAP earnings per share.
Excluding the impact of the December 2015 equity offerings to
finance the Actavis Generics acquisition, the weighted average
outstanding shares for the fully diluted earnings per share
calculation on a non-GAAP basis for the first quarter of 2016 was
861 million shares.
As of March 31, 2016, the fully diluted share count for
calculating Teva's market capitalization was approximately 1,003
million shares.
Total shareholders’ equity was $30.6 billion at March 31,
2016, compared to $29.9 billion at December 31, 2015.
Segment Results for the First Quarter
2016
Generic Medicines Segment
Three Months Ended March 31,
2016 2015 U.S.$ in millions /
% of Segment Revenues
Revenues $ 2,170
100.0%
$ 2,621
100.0%
Gross profit 999 46.0% 1,284 49.0% R&D expenses 136 6.3% 111
4.2% S&M expenses 279 12.8%
374 14.3% Segment profit* $ 584 26.9% $ 799 30.5%
____________________
* Segment profit consists of gross profit for the segment, less
R&D and S&M expenses related to the segment. Segment profit
does not include G&A expenses, amortization and certain other
items.
Generic Medicines Revenues
Generic medicines revenues in the first quarter of 2016 amounted
to $2.2 billion, a decrease of 17% compared to the first quarter of
2015. In local currency terms, revenues decreased 15%.
Generic revenues consisted of:
- U.S. revenues of $976 million, a
decrease of 32% or of $463 million, compared to the first quarter
of 2015. The decrease resulted mainly from a decline in sales of
$427 million due to the loss of exclusivity on esomeprazole
(Nexium®) and budesonide (Pulmicort®).
- European revenues of $671 million, a
decrease of 1%, but up 1% in local currency terms, compared to the
first quarter of 2015. This resulted mainly from our strategy of
pursuing profitable and sustainable business in the region, along
with higher API sales to third parties.
- ROW revenues of $523 million, an
increase of 4%, or 13% in local currency terms, compared to the
first quarter of 2015. The increase in local currency terms was
mainly due to higher revenues in Venezuela and Canada, which were
partially offset by lower revenues in Japan and Russia.
- API sales to third parties of $197
million (which is included in the market revenues above), an
increase of 25% compared to the first quarter of 2015, with higher
revenues in both Europe and the United States.
Generic medicines revenues comprised 45% of our total revenues
in the quarter, compared to 52% in the first quarter of 2015.
Generic Medicines Gross Profit
Gross profit from our generic medicines segment in the first
quarter of 2016 amounted to $1.0 billion, a decrease of 22%
compared to the first quarter of 2015. The lower gross profit was
mainly a result of the lower sales of esomeprazole (Nexium®) and
budesonide (Pulmicort®) in the United States, which are both high
gross profit products. This decrease was partially offset by higher
gross profit of our ROW markets and API business. Gross profit
margin for our generic medicines segment in the first quarter of
2016 decreased to 46.0%, from 49.0% in the first quarter of
2015.
Generic Medicines Profit
Our generic medicines segment generated profit of $584 million
in the first quarter of 2016, a decrease of 27% compared to the
first quarter of 2015. Generic medicines profitability as a
percentage of generic medicines revenues was 26.9% in the first
quarter of 2016, down from 30.5% in the first quarter of 2015. The
decrease was primarily due to the lower gross profit of the
segment, which was partially offset by lower S&M expenses.
Specialty Medicines Segment
Three Months Ended March 31,
2016 2015 U.S.$ in millions /
% of Segment Revenues
Revenues $ 2,152
100.0%
$ 1,956
100.0%
Gross profit 1,871 86.9% 1,678 85.8% R&D expenses 229 10.6% 215
11.0% S&M expenses 457 21.2%
486 24.9% Segment profit* $ 1,185 55.1% $ 977 49.9%
____________________
* Segment profit is comprised of gross profit for the segment, less
R&D and S&M expenses related to the segment. Segment profit
does not include G&A expenses, amortization and certain other
items.
Specialty Medicines Revenues
Specialty medicines revenues in the first quarter of 2016
amounted to $2.2 billion, an increase of 10% compared to the first
quarter of 2015. In local currency terms, revenues increased 11%.
U.S. specialty medicines revenues amounted to $1.7 billion, up 13%
compared to the first quarter of 2015. European specialty medicines
revenues amounted to $394 million, a decrease of 3%, but flat in
local currency terms, compared to the first quarter of 2015. ROW
specialty revenues amounted to $81 million, up 13%, or 27% in local
currency terms, compared to the first quarter of 2015.
Specialty medicines revenues comprised 45% of our total revenues
in the quarter, compared to 40% in the first quarter of 2015.
The increase in specialty medicines revenues compared to the
first quarter of 2015 was primarily due to higher sales of our CNS
and respiratory products.
The following table presents revenues by therapeutic area and
key products for our specialty medicines segment for the three
months ended March 31, 2016 and 2015:
Three Months
Ended
March 31,
PercentageChange
2016 2015 2016 - 2015
U.S. $ in millions CNS $ 1,323 $
1,220 8% Copaxone® 1,006 924 9% Azilect® 113 107 6%
Nuvigil® 103 85 21% Respiratory 366 265 38% ProAir® 173 124 40%
QVAR® 134 98 37% Oncology 268 264 2% Treanda® and Bendeka™ 155 157
(1%) Women's Health 110 129 (15%) Other Specialty
85 78 9%
Total
Specialty Medicines $ 2,152 $ 1,956
10%
Global revenues of Copaxone® (20 mg/mL and 40
mg/mL), the leading multiple sclerosis therapy in the U.S. and
globally, amounted to $1.0 billion, an increase of 9% compared to
the first quarter of 2015.
Copaxone® revenues in the United States amounted to $821
million, an increase of 12% compared to the first quarter of 2015.
The increase was mainly due to higher net pricing, including a
price increase of 7.9% in January 2016. At the end of the first
quarter of 2016, according to March 2016 IMS data, our U.S. market
shares for the Copaxone® products in terms of new and total
prescriptions were 28.1% and 29.8%, respectively. Copaxone® 40
mg/mL accounted for over 81% of total Copaxone® prescriptions in
the U.S.
Copaxone® revenues outside the United States amounted to $185
million, a decrease of 4%, but an increase of 2% in local currency
terms, compared to the first quarter of 2015.
Our global Azilect® revenues amounted to $113 million, an
increase of 6% compared to the first quarter of 2015. In local
currency terms, revenues increased 7%. Global in-market sales
decreased 13%.
Revenues of our respiratory products amounted to $366
million, up 38% compared to the first quarter of 2015.
ProAir® revenues in the quarter increased 40% to $173
million, compared to the first quarter of 2015, due to volume
growth and positive price effects. QVAR® global
revenues increased 37% to $134 million in the first quarter of
2016, compared to the first quarter of 2015, mainly due to positive
price effects.
Revenues of our oncology products amounted to $268
million in the first quarter of 2016, up 2% from the first quarter
of 2015. Revenues of Treanda® and Bendeka™ amounted
to $155 million, down 1% compared to the first quarter of 2015.
Specialty Medicines Gross Profit
Gross profit from our specialty medicines segment amounted to
$1.9 billion, an increase of $193 million compared to the first
quarter of 2015. Gross profit margin for our specialty medicines
segment in the first quarter of 2016 was 86.9%, compared to 85.8%
in the first quarter of 2015.
Specialty Medicines Profit
Our specialty medicines segment profit amounted to $1.2 billion
in the first quarter of 2016, up 21% compared to the first quarter
of 2015, mainly due to higher gross profit and lower S&M
expenses.
Specialty medicines profit as a percentage of segment revenues
was 55.1% in the first quarter of 2016, up from 49.9% in the first
quarter of 2015.
The following tables present details of our multiple sclerosis
franchise and of our other specialty medicines for the three months
ended March 31, 2016 and 2015:
Multiple Sclerosis Three
months ended March 31, 2016
2015 U.S.$ in millions / % of MS Revenues
Revenues $ 1,006
100.0%
$ 924
100.0%
Gross profit 919 91.4% 819 88.6% R&D expenses 25 2.5% 27 2.9%
S&M expenses 89
8.9% 135
14.6% MS profit $ 805
80.0% $ 657 71.1%
Other Specialty Three months ended March 31,
2016 2015 U.S.$ in millions / % of Other Specialty
Revenues Revenues $ 1,146
100.0%
$ 1,032
100.0%
Gross profit 952 83.1% 859 83.2% R&D expenses 204 17.8% 188
18.2% S&M expenses 368
32.1% 351
34.0% Other Specialty profit $ 380
33.2% $ 320
31.0%
Other Activities
Our OTC revenues related to PGT amounted to $288 million,
an increase of 35% compared to $213 million in the first quarter of
2015. In local currency terms, revenues increased 47%, mainly due
to inflation and higher volumes in Venezuela. PGT’s in-market sales
amounted to $411 million in the first quarter of 2016, an increase
of $37 million compared to the first quarter of 2015.
Other revenues amounted to $200 million in the first
quarter of 2016, mostly from the distribution of third-party
products in Israel and Hungary, compared to revenues of $192
million in the first quarter of 2015.
Financial Outlook
Pending the closing of the Actavis Generics acquisition, we are
providing revenue and non-GAAP EPS guidance for the second quarter
2016. This includes the results of the Rimsa acquisition and the
Teva-Takeda business venture, but not of the Actavis Generics
acquisition. Additional guidance will be provided after closing the
Actavis Generics acquisition.
We continue to work toward satisfying all conditions for the
closing and, based on our estimate of the timing to obtain
clearance from the U.S. Federal Trade Commission, we currently
expect to close in June 2016.
- We expect revenues for the second
quarter of 2016 to be $4.7-$4.9 billion.
- Non-GAAP EPS for the second quarter of
2016 is expected to be $1.16-$1.20. Excluding the impact of the
December 2015 equity offerings, non-GAAP EPS is expected to be
$1.32-$1.36.
- Cash flow from operating activities for
the second quarter of 2016 is expected to be $1.2-$1.3
billion.
These estimates reflect management`s current expectations for
Teva's performance in 2016. Actual results may vary, whether as a
result of exchange rate differences, market conditions or other
factors. In addition, the non-GAAP figures exclude the amortization
of purchased intangible assets, costs related to certain regulatory
actions, inventory step-up, legal settlements and reserves,
impairments and related tax effects.
The non-GAAP data presented by Teva are the results used by
Teva's management and board of directors to evaluate the
operational performance of the company, to compare against the
company's work plans and budgets, and ultimately to evaluate the
performance of management. Teva provides such non-GAAP data to
investors as supplemental data and not in substitution or
replacement for GAAP results, because management believes such data
provides useful information to investors.
Dividend
On May 5, 2016, the Board of Directors declared a cash dividend
of $0.34 per ordinary share for the first quarter of 2016. For
holders of our ordinary shares that are traded on the Tel Aviv
Stock Exchange, the dividend will be converted into new Israeli
shekels based on the official exchange rate as of May 9, 2016.
The record date will be May 24, 2016, and the payment date will
be June 7, 2016. Tax will be withheld at a rate of 15%.
On March 15, 2016, we paid a dividend of $71 million (including
withholding taxes) to the holders of record of our mandatory
convertible preferred shares as of March 1, 2016.
Conference Call
Teva will host a conference call and live webcast along with a
slide presentation on Monday, May 9, 2016, at 8 a.m. ET to discuss
its first quarter 2016 results and overall business environment. A
question & answer session will follow.
In order to participate, please dial the following numbers (at
least 10 minutes before the scheduled start time): United States
1-866-254-0808; Canada 1-866-607-2172; or International +44(0)
1452-541003; passcode: 88267484. For a list of other international
toll-free numbers, click, click here.
A live webcast of the call will also be available on Teva's
website at: www.ir.tevapharm.com. Please log in at least 10 minutes
prior to the conference call in order to download the applicable
audio software.
Following the conclusion of the call, a replay of the webcast
will be available within 24 hours on the Company's website. The
replay can also be accessed until June 10, 2016, 10:00 a.m. ET by
calling United States 1-866-247-4222; Canada 1-866-878-9237 or
International +44(0) 1452-550000; passcode: 88267484.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a
leading global pharmaceutical company that delivers high-quality,
patient-centric healthcare solutions to millions of patients every
day. Headquartered in Israel, Teva is the world’s largest generic
medicines producer, leveraging its portfolio of more than 1,000
molecules to produce a wide range of generic products in nearly
every therapeutic area. In specialty medicines, Teva has a
world-leading position in innovative treatments for disorders of
the central nervous system, including pain, as well as a strong
portfolio of respiratory products. Teva integrates its generics and
specialty capabilities in its global research and development
division to create new ways of addressing unmet patient needs by
combining drug development capabilities with devices, services and
technologies. Teva's net revenues in 2015 amounted to $19.7
billion. For more information, visit www.tevapharm.com.
Teva's Safe Harbor Statement under the U. S. Private
Securities Litigation Reform Act of 1995:
This press release contains forward-looking statements, which
are based on management’s current beliefs and expectations and
involve a number of known and unknown risks and uncertainties that
could cause our future results, performance or achievements to
differ significantly from the results, performance or achievements
expressed or implied by such forward-looking statements. Important
factors that could cause or contribute to such differences include
risks relating to: our ability to develop and commercialize
additional pharmaceutical products; competition for our specialty
products, especially Copaxone® (including competition from
orally-administered alternatives, as well as from generic
equivalents) and our ability to continue to migrate users to our 40
mg/mL version and maintain patients on that version; our ability to
identify and successfully bid for suitable acquisition targets or
licensing opportunities, or to consummate and integrate
acquisitions (such as our pending acquisition of Actavis Generics
and the integration of Rimsa); the possibility of material fines,
penalties and other sanctions and other adverse consequences
arising out of our ongoing FCPA investigations and related matters;
our ability to achieve expected results from the R&D efforts
invested in our pipeline of specialty and other products; our
ability to reduce operating expenses to the extent and during the
timeframe intended by our cost reduction program; the extent to
which any manufacturing or quality control problems damage our
reputation for quality production and require costly remediation;
increased government scrutiny in both the U.S. and Europe of our
patent settlement agreements; our exposure to currency fluctuations
and restrictions as well as credit risks; the effectiveness of our
patents, confidentiality agreements and other measures to protect
the intellectual property rights of our specialty medicines; the
effects of reforms in healthcare regulation and pharmaceutical
pricing, reimbursement and coverage; governmental investigations
into sales and marketing practices, particularly for our specialty
pharmaceutical products; adverse effects of political or economic
instability, major hostilities or acts of terrorism on our
significant worldwide operations; interruptions in our supply chain
or problems with internal or third-party information technology
systems that adversely affect our complex manufacturing processes;
significant disruptions of our information technology systems or
breaches of our data security; competition for our generic
products, both from other pharmaceutical companies and as a result
of increased governmental pricing pressures; competition for our
specialty pharmaceutical businesses from companies with greater
resources and capabilities; the impact of continuing consolidation
of our distributors and customers; decreased opportunities to
obtain U.S. market exclusivity for significant new generic
products; potential liability in the U.S., Europe and other markets
for sales of generic products prior to a final resolution of
outstanding patent litigation; our potential exposure to product
liability claims that are not covered by insurance; any failure to
recruit or retain key personnel, or to attract additional executive
and managerial talent; any failures to comply with complex Medicare
and Medicaid reporting and payment obligations; significant
impairment charges relating to intangible assets, goodwill and
property, plant and equipment; the effects of increased leverage
and our resulting reliance on access to the capital markets;
potentially significant increases in tax liabilities; the effect on
our overall effective tax rate of the termination or expiration of
governmental programs or tax benefits, or of a change in our
business; variations in patent laws that may adversely affect our
ability to manufacture our products in the most efficient manner;
environmental risks; and other factors that are discussed in our
Annual Report on Form 20-F for the year ended December 31, 2015 and
in our filings with the U.S. Securities and Exchange Commission
(the "SEC").
Forward-looking statements speak only as of the date on which
they are made and we assume no obligation to update or revise any
forward-looking statements or other information contained herein,
whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we
make in our reports to the SEC on Form 6-K. Also note that we
provide a cautionary discussion of risks and uncertainties under
“Risk Factors” in our Annual Report on Form 20-F for the year ended
December 31, 2015. These are factors that we believe could cause
our actual results to differ materially from expected results.
Other factors besides those listed could also adversely affect us.
This discussion is provided as permitted by the Private Securities
Litigation Reform Act of 1995.
Consolidated Statements of
Income (Unaudited, U.S. dollars in millions,
except share and per share data)
Three months ended March 31, 2016 2015
Net revenues 4,810 4,982
Cost of sales 2,019 2,146
Gross profit 2,791 2,836
Research and development
expenses 389 332
Selling and marketing expenses 839 922
General and administrative expenses 304 307
Impairments,
restructuring and others 119 299
Legal settlements and loss
contingencies (25) 227
Operating income 1,165 749
Financial expenses – net 298 192
Income before income
taxes 867 557
Income taxes 228 104
Share in losses of
associated companies – net 6 9
Net income 633 444
Net
loss attributable to non-controlling interests (3) (2)
Net
income attributable to Teva 636 446
Dividends on preferred
shares 66 -
Net income attributable to ordinary
shareholders 570 446
Earnings per share attributable
to ordinary shareholders: Basic ($) 0.62 0.52
Diluted
($) 0.62 0.52
Weighted average number of shares (in
millions): Basic 913 851
Diluted 920 859
Non-GAAP net income attributable to ordinary shareholders:*
1,106 1,165
Non-GAAP earnings per share attributable to
ordinary shareholders:* Basic ($) 1.21 1.37
Diluted
($)** 1.20 1.36
Weighted average number of shares (in
millions): Basic 913 851
Diluted 979 859
Non-GAAP earnings per share adjusted to exclude Dec 15
equity offerings Diluted ($) 1.36 1.36
Weighted average number of shares adjusted to exclude Dec 15
equity offerings (in millions) Diluted 861 859 *
See reconciliation attached. **Dividends on the mandatory
convertible preferred shares of $66 million for the three months
ended March 31, 2016 are added back to non-GAAP net income
attributable to ordinary shareholders, since such preferred shares
had a dilutive effect on non-GAAP earnings per share.
Condensed
Consolidated Balance Sheets
(U.S. dollars in
millions)
(Unaudited)
March
31, December 31, 2016 2015 ASSETS
Current assets: Cash and cash equivalents 5,964 6,946
Accounts receivable 5,188 5,350 Inventories 3,963 3,966 Deferred
income taxes 805 735 Other current assets 1,074 1,401
Total
current assets 16,994 18,398
Other non-current assets
2,661 2,591
Property, plant and equipment, net 6,632 6,544
Identifiable intangible assets, net 8,566 7,675
Goodwill 20,273 19,025
Total assets 55,126 54,233
LIABILITIES AND EQUITY Current
liabilities: Short-term debt 1,581 1,585 Sales reserves and
allowances 6,443 6,601 Accounts payable and accruals 3,528 3,594
Other current liabilities 1,353 1,225
Total current
liabilities 12,905 13,005
Long-term liabilities:
Deferred income taxes 1,698 1,748 Other taxes and long-term
liabilities 1,313 1,195 Senior notes and loans 8,619 8,358
Total
long-term liabilities 11,630 11,301
Equity: Teva
shareholders’ equity 30,435 29,769 Non-controlling interests 156
158
Total equity 30,591 29,927
Total liabilities and
equity 55,126 54,233
Condensed
Consolidated Cash Flow
(Unaudited, U.S.
Dollars in millions)
Three months ended
March 31, 2016 2015 Operating
activities: Net income 633 444
Net change in
operating assets and liabilities 189 557
Items not involving
cash flow 554 353
Net cash provided by
operating activities 1,376 1,354
Net cash used in
investing activities (2,417) (219)
Net cash provided
by financing activities 267 93
Translation adjustment
on cash and cash equivalents (208) (58)
Net
change in cash and cash equivalents (982) 1,170
Balance of cash and cash equivalents at beginning of period
6,946 2,226
Balance of cash and cash equivalents
at end of period 5,964 3,396
Non GAAP
reconciliation items
(Unaudited, U.S.
Dollars in millions)
Three months ended March
31, 2016 2015 Financial
expense 246 143 Amortization of purchased intangible assets 189 220
Acquisition and related expenses 101 245 Equity compensation 24 27
Restructuring expenses 19 3 Impairment of long-lived assets 13 65
Other non-GAAP items 43 (3) Legal settlements and loss
contingencies (25) 227 Corresponding tax benefit (74) (208)
Reconciliation
between net income attributable to ordinary shareholders and
earnings per share
as reported under
US GAAP to non-GAAP net income attributable to ordinary
shareholders and earnings per share
Three months ended March 31,
2016 Three months ended March 31, 2015 U.S.
dollars and shares in millions (except per share amounts)
Dividends on
Non-GAAP Preferred % of Net Non-GAAP
% of Net GAAP Adjustments Shares
Non-GAAP Revenues GAAP Adjustments
Non-GAAP Revenues Gross profit (1) 2,791 225 -
3,016 63% 2,836 226 3,062 61% Operating income (1)(2) 1,165 361 -
1,526 32% 749 784 1,533 31% Net income attributable to ordinary
shareholders (1)(2)(3)(4) 570 536 66 1,172 24% 446 719 1,165 23%
Earnings per share attributable to ordinary shareholders - diluted
(5) 0.62 0.58 - 1.20 0.52 0.84 1.36 (1)
Amortization of purchased intangible assets 178 212 Equity
compensation 3 3 Other COGS related adjustments 44 11 Gross profit
adjustments 225 226
(2) Legal settlements and loss contingencies (25) 227 Acquisition
and related expenses 98 245 Equity compensation 21 24 Restructuring
expenses 19 3 Impairment of long-lived assets 13 65 Amortization of
purchased intangible assets 11 8 Other operating related
adjustments (1) (14) 136 558 - - Operating income adjustments 361
784 246 143 (3) Financial expense 246 143 Tax effect (74) (208)
Impairment of equity investment—net 3 -
- - Net income adjustments 536 719 (4) Dividends on
the mandatory convertible preferred shares of $66 million for the
three months ended March 31, 2016 are added back to non-GAAP net
income attributable to ordinary shareholders, since such preferred
shares had a dilutive effect on non-GAAP earnings per share, as
described in the following footnote. (5) The non-GAAP
weighted average number of shares was 979 and 859 million for the
three months ended March 31, 2016 and 2015, respectively. The
non-GAAP weighted average number of shares for the three months
ended March 31, 2016 takes into account the potential dilution of
the mandatory convertible preferred shares (amounting to 59 million
weighted average shares), which had a dilutive effect on non-GAAP
earnings per share. Non-GAAP earnings per share can be reconciled
with GAAP earnings per share by dividing each of the amounts
included in footnotes 1-4 above by the applicable weighted average
share number.
Segment Information
Generics Three months ended
March 31, Percentage Change 2016
2015 2016 - 2015 U.S.$ in millions / %
of Segment Revenues Revenues $ 2,170 100% $ 2,621
100.0% (17%) Gross Profit 999 46.0% 1,284 49.0% (22%) R&D
Expenses 136 6.3% 111 4.2% 23% S&M Expenses 279
12.8% 374 14.3% (25%) Segment Profit* $ 584
26.9% $ 799 30.5% (27%)
Specialty Three
months ended March 31, Percentage Change 2016
2015 2016 - 2015 U.S.$ in millions / % of Segment
Revenues Revenues $ 2,152 100% $ 1,956 100.0% 10% Gross
Profit 1,871 86.9% 1,678 85.8% 12% R&D Expenses 229 10.6% 215
11.0% 7% S&M Expenses 457 21.2% 486
24.9% (6%) Segment Profit* $ 1,185 55.1% $ 977 49.9%
21% * Segment profit consists of gross profit, less S&M
and R&D expenses related to the segment.
Segment profitability does not include
G&A expenses, amortization and certain other items.
Additional information
Multiple Sclerosis Three months ended March
31, Percentage Change 2016
2015 2016 - 2015 U.S.$ in millions / % of
MS Revenues Revenues $ 1,006 100.0% $ 924 100.0%
9% Gross profit 919 91.4% 819 88.6% 12% R&D expenses 25 2.5% 27
2.9% (7%) S&M expenses 89 8.9% 135
14.6% (34%) MS profit $ 805 80.0% $ 657 71.1% 23%
Other Specialty Three months ended March
31, Percentage Change 2016 2015 2016 -
2015 U.S.$ in millions / % of Other Specialty Revenues
Revenues $ 1,146 100.0% $ 1,032 100.0% 11% Gross profit 952
83.1% 859 83.2% 11% R&D expenses 204 17.8% 188 18.2% 9% S&M
expenses 368 32.1% 351 34.0% 5% Other
Specialty profit $ 380 33.2% $ 320 31.0% 19%
Reconciliation of our segment profit to Teva's
consolidated income before income taxes
Three months ended March 31, 2016
2015 U.S.$ in millions
Generic medicines profit $ 584 $ 799 Specialty medicines profit
1,185 977 Total segment profit 1,769 1,776 Profit of
other activities 51 50 Total profit 1,820 1,826
Amounts not allocated to segments: Amortization 189 220 General and
administrative expenses 304 307 Impairments, restructuring and
others 119 299 Legal settlements and loss contingencies (25) 227
Other unallocated amounts 68 24
Consolidated operating income 1,165 749 Financial
expenses - net 298 192 Consolidated income before
income taxes $ 867 $ 557
Revenues by Activity and
Geographical Area (Unaudited)
Three Months Ended
March 31,
Percentage
Change
Percentage
Change
2016 2015 2016 - 2015
2016 - 2015 U.S. $ in millions
in local
currencies
Generic Medicines United States $ 976 $ 1,439 (32 %) (32 %) Europe*
671 680 (1 %) 1 % Rest of the World. 523 502 4 % 13 %
Total Generic Medicines 2,170 2,621 (17 %) (15 %) Specialty
Medicines United States 1,677 1,479 13 % 13 % Europe* 394 405 (3 %)
§ Rest of the World. 81 72 13 % 27 % Total Specialty
Medicines 2,152 1,956 10 % 11 % Other Revenues United States 4 3 33
% 33 % Europe* 170 182 (7 %) (4 %) Rest of the World. 314
220 43 % 52 % Total Other Revenues 488 405 20
% 27 % Total Revenues $ 4,810 $ 4,982 (3 %) (1 %) * All
members of the European Union, Switzerland, Norway, Albania and the
countries of former Yugoslavia. § Less than 0.5%.
Revenues by Product line (Unaudited)
Three Months Ended
March 31,
Percentage
Change
2016 2015 2016 - 2015 U.S. $
in millions Generic Medicines $
2,170 $ 2,621 (17 %) API 197 157
25 %
Specialty Medicines 2,152 1,956 10
% CNS 1,323 1,220 8 % Copaxone® 1,006 924 9 % Azilect® 113
107 6 % Nuvigil® 103 85 21 % Respiratory 366 265 38 % ProAir® 173
124 40 % QVAR® 134 98 37 % Oncology 268 264 2 % Treanda® and
Bendeka™ 155 157 (1 %) Women's Health 110 129 (15 %) Other
Specialty 85 78 9 %
All Others 488 405
20 % OTC 288 213 35 % Other Revenues 200
192 4 %
Total $ 4,810 $
4,982 (3 %)
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160509005377/en/
Teva Pharmaceutical Industries Ltd.IR:United StatesKevin C.
Mannix, 215-591-8912Ran Meir, 215-591-3033orIsraelTomer Amitai, 972
(3) 926-7656orPR:IsraelIris Beck Codner, 972 (3) 926-7246orUnited
StatesDenise Bradley, 215-591-8974
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