Teva Pharmaceutical Industries Q2 Earnings Call Highlights

Teva Pharmaceutical Industries NYSE: TEVA reported second-quarter 2026 revenue of approximately $4.1 billion, down 1% from a year earlier in U.S. dollars, as lower sales from generic Revlimid were largely offset by growth in its innovative medicines portfolio.

Chief Executive Officer Richard Francis said Teva’s growth strategy is increasingly being driven by AUSTEDO, AJOVY and UZEDY, whose combined revenue rose 43% year over year during the quarter. The company raised its full-year revenue outlook for all three products and increased the midpoint of its overall 2026 revenue guidance by $75 million.

Innovative portfolio drives guidance increases

AUSTEDO, Teva’s treatment for tardive dyskinesia and Huntington’s disease chorea, generated $676 million in U.S. revenue during the quarter, up 33% year over year. Global revenue increased 40%, supported by a 14% increase in total prescriptions and 21% growth in milligrams dispensed, Francis said. AUSTEDO XR accounted for more than 60% of new AUSTEDO patient starts.

Teva raised AUSTEDO’s 2026 revenue guidance to a range of $2.45 billion to $2.6 billion, an increase of $50 million at the midpoint. Francis said the midpoint of the revised range reaches the company’s previously stated 2027 target of $2.5 billion and reiterated Teva’s expectation for more than $3 billion in peak sales.

UZEDY, a long-acting injectable treatment for schizophrenia, posted quarterly revenue of $77 million, up 43% from a year earlier. Total prescriptions and monthly order trends increased 63%, according to Francis. Teva raised its full-year UZEDY forecast by $15 million at the midpoint to a range of $270 million to $290 million.

AJOVY, Teva’s migraine treatment, generated global revenue of $244 million, an increase of 56% year over year. U.S. revenue climbed 83%, aided by improved contracting, favorable gross-to-net trends and market-share gains, Francis said. The company lifted AJOVY’s full-year outlook by $90 million at the midpoint to $850 million to $870 million and said it sees a path to $1 billion in peak sales.

Teva is preparing for a potential fourth-quarter FDA action and U.S. launch of its long-acting injectable olanzapine product. The company said it expects no revenue contribution from the product in the fourth quarter because initial use would largely consist of samples or vouchers while payer coverage is established.

Generics pressure and biosimilar expansion

Global generics revenue fell 15% year over year, primarily because of a lower contribution from generic Revlimid. Excluding generic Revlimid, Francis said the generics business was stable, with global generics down 2% and U.S. generics up 1%.

Management said lower launch activity, a softer cough-and-cold season and increased competition in some markets are expected to weigh on 2026 generics results. Teva expects global generics revenue, excluding generic Revlimid and the divestment of its Japan business, to range from flat to down low single digits in local currency for the full year.

Still, the company identified biosimilars as an emerging growth platform. Teva has 15 biosimilar products on the market and 14 in its pipeline. Francis said two of its five U.S. biosimilars are market leaders, while a third is close to taking the top position. The company expects to exceed its target of $800 million in biosimilar revenue by 2027.

Profitability, cash flow and balance sheet

Teva reported a GAAP net loss of $576 million, or $0.49 per share, for the second quarter. The results included $724 million in in-process research and development expense related to Teva’s June acquisition of Emalex Biosciences, which was accounted for as an asset acquisition.

On a non-GAAP basis, Teva reported earnings per share of $0.02. Excluding the Emalex-related impact, non-GAAP EPS would have been $0.63, Chief Financial Officer Eli Kalif said. Non-GAAP gross margin increased 80 basis points to 55.4%, while non-GAAP operating margin was 9% including Emalex-related expenses. Excluding those expenses, operating margin would have been 26.6%.

Free cash flow rose 31% year over year to $622 million. Teva ended the quarter with net debt of $12.9 billion and a net-debt-to-EBITDA ratio of 2.8 times. Excluding the Emalex acquisition, the ratio would have been 2.3 times, Kalif said, putting the company on track toward its target of below 2 times by 2027.

Fitch upgraded Teva to investment grade in May, marking the company’s return to investment-grade status for the first time since 2017, according to Kalif.

Pipeline milestones ahead

Teva submitted ecopipam to the FDA in June for Tourette syndrome and expects a potential launch in the first half of 2027 if approved. The company said it sees an unmet need among pediatric patients, citing an estimated 100,000 children with Tourette syndrome in the U.S., with about half receiving treatment.

The company also outlined upcoming pipeline events, including a second-half readout from its anti-IL-15 celiac disease proof-of-concept study, an expected year-end event-driven study milestone for its dual-action rescue inhaler program in asthma, and a planned fourth-quarter regulatory action for long-acting olanzapine.

Teva and partner Sanofi also added hidradenitis suppurativa and fibrostenotic Crohn’s disease as research indications for duvakitug. Eric Hughes, Teva’s head of global research and development and chief medical officer, said the company expects to pursue a traditional Phase 2b study in hidradenitis suppurativa, with primary endpoints likely assessed around 16 weeks.

Looking ahead, Teva reaffirmed its 2026 outlook for operating profit, adjusted EBITDA, EPS and free cash flow. Management said it continues to target mid-single-digit revenue growth, a 30% non-GAAP operating margin, net debt to EBITDA below 2 times and cash conversion of 80% by 2027.

About Teva Pharmaceutical Industries (NYSE:TEVA)

Teva Pharmaceutical Industries Ltd. NYSE: TEVA is an Israeli multinational pharmaceutical company and one of the world's largest manufacturers of generic medicines. The company's core activities include the development, production and marketing of generic pharmaceuticals alongside a portfolio of specialty branded medicines. Teva supplies finished dosage forms and active pharmaceutical ingredients (APIs) to markets around the globe and operates manufacturing and research facilities in multiple countries.

Teva's product range covers oral solids, injectables, inhalation products and other dosage forms across therapeutic areas such as central nervous system disorders, respiratory, oncology, pain and infectious disease.

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