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Reports earnings of $ 0.68 per share – above consensus forecasts for earnings of 0.63 cents per share. Revenue was $ 4.5 billion, compared to $ 4.4 billion in revenue projections. For the full year, Teva earned $ 2.57 per share compared to analysts’ forecast of $ 2.51 per share. Revenues for the year totaled 16.7 compared to the forecast of 16.6 billion. Teva’s management itself provided a quarterly earnings forecast of $ 2.4-2.55 per share and revenue of $ 16.5 billion to $ 16.8 billion – that is, the results were above analysts’ forecast and management’s forecast.
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In the coming year, Teva’s management expects revenue of $ 16.4-16.8 billion and earnings per share of $ 2.5-2.7 per share. Analysts had expected earnings of $ 2.66 per share in 2021 and revenue of $ 16.8 billion. also here, Teva lives up to forecasts, but hardly. In relation to the consensus forecast for 2021, Teva provides lower expectations, and the market may punish it for this, even though the company has positive momentum and so does the stock.
An important point in the reports is the invited cash flow – Teva generated $ 471 million in cash in the quarter, and $ 2.1 billion each year, with net financial debt totaling about $ 24 billion at the end of the year.
“Despite the challenges of the Corona epidemic, we have experienced minimal impact on our supply chain, R&D programs and product launches,” he said. Carr Schultz, President and CEO of Teva. “Following good results in the fourth quarter, we met all components of the annual forecast for 2020.” Our key growth engines have yielded promising results and milestones, including the continued growth of Osteo and our leading biosimilar drug Troxima, while Ajobi sales continue to improve following the launch of the Otomic syringe “.
Schultz added that “our performance in generics has received a boost from the successful launch of generic versions for HIV-1, Truvada and Atripla in the US. In addition, we have taken steps to strengthen our accumulation of biopharmaceutical products, with an agreement for the commercialization of biosimilar products. We also promote the rest of the products’ accumulated assets, including the latest results from the Phase 3 trial of risperidone injection with delayed release for patients with schizophrenia. We will continue to optimize our operating chain, portfolio and product portfolio, improve profitability and generate cash, while continuing on the path as planned, repaying our debt and meeting long-term financial goals. ”
Teva’s product sales – 2020 data against management’s forecast for 2021
Revenues in the U.S. and Canada totaled $ 2.3 billion in the quarter, down 3% from the same period last year. And Ajobi. In nature, it is explained that the corona that kept patients away from hospitals led to a decrease in activity in the United States, and on the other hand, patients with the virus would cause an increase in demand for some of the company’s products that alleviate the symptoms of the virus.
Revenue from the U.S. generics division in the quarter rose 6 percent to $ 1.2 billion from the same quarter last year.
In Europe, Teva recorded revenue of $ 1.2 billion in the quarter, an increase of 4% from the closing quarter of 2019. However, when calculated in euros, this is in fact a nominal decrease of 1%, which is also attributed to the effects of corona. Patients have seen a decrease in the number of prescriptions for Teva’s prescription drugs. Another factor in the decrease was the decrease in the prices of oncology drugs due to the competition in the market, as well as the decrease in Copaxone sales due to the competing drug of the competitors.
In the other markets, sales in the fourth quarter fell by 1% to $ 572 million. Excluding exchange rate differences, this is a 5% increase due to increased sales, which were partially offset in Japan due to price reductions ordered by the regulator, as well as competition in the country’s generics sector.
Teva shares have been trading in a positive trend since the beginning of the year – an increase of over 20% to a price of NIS 43 per share, which expresses a value of NIS 47.5 billion. The increase in the share is due to a continuous improvement in the financial statements and the company’s relatively favorable pricing – a profit multiplier of about 5. This is a significantly lower profit multiplier from the entire pharmaceutical industry, which is traded at a multiplier of 10-15, and a low multiplier compared to the generic companies that are traded at a profit multiplier of about 10. Teva’s seemingly cheap pricing is an ongoing matter.
A possible reason for the low pricing is the lack of revenue growth in recent years. Its main product – Copaxone, the ethical drug for the treatment of multiple sclerosis, is declining significantly and the new products have tried, with partial success so far, to offset the decline. However, Teva is transmitting back to growth, albeit moderate and the market may return to refer to it later as a growing company.
So Teva’s management is taking care of the growth, it is also managing to reduce the financial debt that is obscuring the stock, but the big concern of investors remains the legal cloud. Complicated nature (inherited from the acquisition of the generic division of Allergen) in claims for marketing addictive painkillers. In the past year, there has been talk of a compromise, which has already been reached by painkiller manufacturer Fredo Pharma, which could have a positive effect on the lawsuits against Teva. A ruling of compensation of over $ 8 billion on behalf of Fredo would become a kind of benchmark.
For Teva, this is good news, as many investors are ignoring it due to the fear that as a $ 12.8 billion company, claims of more than $ 20 billion will collapse. On the part of the plaintiffs, the continued existence of Teva is worth more money to it than the closure of the company.
According to some reports, Teva is trying to reach a compromise of about $ 25 billion, an amount that will be paid by me in the form of drugs that it will provide for a decade, mainly to painkillers at the heart of the lawsuits – and not in monetary payment. This is by the way a compromise agreement signed with Fredo.
If the compromise is in the amount of $ 12-15 billion, Teva’s previous offer, also in the form of a future supply of drugs, the real cost for the company is $ 2-3 billion. If it is a double sum, the cost will be $ 4 billion to $ 6 billion – not something that will collapse the company. The spread of supply over a decade means an additional expenditure of hundreds of millions of dollars every year, so that Teva will earn less, but the decline will be less than $ 2.5 billion a year.