Teva Pharmaceutical Industries (TEVA) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue was $15.846B, up 6% reported and 7% in local currency; growth included a $500M upfront anti-TL1A collaboration payment.

• Q4 revenue was $4.457B, up 15% in U.S. dollars and 14% in local currency, with growth led partly by the anti-TL1A payment, product-rights sales and AUSTEDO.

• Pivot to Growth prioritizes innovative brands and late-stage pipeline assets, complex generics, innovation investment, portfolio and manufacturing optimization, and API divestiture.

Financial highlights

• FY 2023 non-GAAP revenue was $15.846B, operating income $4.361B, net income $2.898B and diluted EPS $2.56; FY GAAP operating income was $433M and net loss $559M, or $(0.50) per share.

• Q4 non-GAAP operating income was $1.546B, net income $1.135B and diluted EPS $1.00; GAAP operating income was $755M and net income $461M, or $0.41 per diluted share.

• FY gross profit was $7.645B, up 10%; GAAP gross margin was 48.2% versus 46.7%, and non-GAAP gross margin was 53.5% versus 54.0%.

• Q4 gross profit rose 36% to $2.416B; GAAP gross margin was 54.2% versus 45.6%, and non-GAAP gross margin was 58.2% versus 54.2%.

• FY R&D expense rose 14% to $953M, S&M expense rose 3% to $2.336B and G&A fell 2% to $1.162B.

Outlook and guidance

• 2024 guidance: revenue $15.7B–$16.3B; non-GAAP operating income $4.0B–$4.5B; Adjusted EBITDA $4.5B–$5.0B; diluted EPS $2.20–$2.50; free cash flow $1.7B–$2.0B.

• 2024 product revenue targets: AUSTEDO ~$1.5B, AJOVY ~$500M, UZEDY ~$80M and COPAXONE ~$400M; CAPEX guidance is ~$0.5B.

• Other 2024 assumptions include finance expenses of ~$1.0B and a 14%–17% tax rate; volatile FX may negatively affect revenue and income.

• 2027 targets: mid-single-digit revenue CAGR, 30% operating income margin, net debt/Adjusted EBITDA of 2.0x and cash-to-earnings of 80%.