Teva's business results impressed investors on both the New York Stock Exchange and the Tel Aviv Stock Exchange. But investors were even more impressed with the company's forecasts for 2020. In response, New York's Teva stock jumped 9.2%. Teva's share has risen by more than thirty-five percent over the past three months. Impressive lesson for all opinions.
Teva presented yesterday encouraging results for the fourth quarter of 2019. The company's revenue was $ 4.6 billion, compared to an average analyst forecast of $ 4.35 billion. Net profit reached 62 cents a share, one cent above expectations.
The forecast assumes another $ 1.2 billion contraction in Copaxone sales. Ostado sales are expected to rise from $ 412 million to $ 650 million by 2020, while Ajobi will reach $ 250 million after barely scrapping $ 100 million in 2019 (and disappointing investors, who expected $ 150 million in revenue ).
A few weeks ago, Teva received approval for an autojib injector, a source of migraine prevention, and its entry into the market is supposed to facilitate Teva's competition with the parallel drugs.
At the end of 2019, Teva posted revenue of $ 16.9 billion and net income of $ 2.4 per share. Teva also announced an error in recognizing revenues from SLA's distribution business in Israel, forcing it to reduce its quarterly revenue line by $ 100 million for the fourth quarter (from 4.6 to 4.5) and on an annual basis from $ 17.5 billion to $ 16.9 billion. The company notes that profitability should not be mistaken.
At the release of the reports, CEO of Teva Cor Schultz commented: "Our main growth products reached important milestones in 2019, including the launch of Ajobi in the EU, continued strong growth for Ostado and the successful launch of our first biosimilar drug, Truxima in North America. By 2020, we expect to see continued drug growth "
Natural revenues in the fourth quarter totaled $ 4.47 billion, compared to $ 4.35 billion in revenue analysts forecast. The company notes that this was about 1% revenue growth in the corresponding quarter (restatement), mainly attributable to sales growth of AUSTEDO and AJOVY, which was partially offset by the continued decline in Copaxone in North America.
On the bottom line, Teva reports adjusted earnings (Non-GAAP) of $ 683 million or 62 cents per share, compared with adjusted earnings of $ 543 million or 53 cents per share in the corresponding quarter last year and against analysts' average earnings forecast of 61 cents per share.
Teva's cash flow for the past quarter was $ 538 million, compared with the strong cash flow for the previous quarter - $ 550 million.
The company expects revenues in the range of $ 16.6-17 billion in the current year (mid-range $ 16.8 billion), compared to a consensus of analysts who projected revenues of $ 17.18 billion for 2020. As mentioned above, revenues were downgraded for a technical accounting reason.
The bottom line is that the company expects adjusted earnings in the range of $ 2.3-2.55 per share (mid-term $ 2.43 per share), slightly lower than the consensus analysts who expected $ 2.47 per share in 2020.
Free cash flow (FCF) is expected to be in the range of $ 1.8-2.2 billion. Reduction of more than $ 3 billion in cost base
Carr Schultz CEO of Teva: "In 2019 we took great steps to place Teva in a position to renew its growth and complete its two-year restructuring plan, which includes lowering the company's cost base by more than $ 3 billion and reducing net debt by more than $ 9 billion , While maintaining global leadership in the generic sector and providing service to over 200 million patients a day. "
"Key products for the company's growth reached very significant milestones in 2019, including the launch of AJOVY in Europe, continued strong growth of AUSTEDO, and the successful launch of the biosimilar drug TRUXIMA in the United States. By 2020, we expect continued growth of these three products."
"Looking ahead, we will continue to transform the production line, improve profitability, and generate cash that will continue to lower the company's debt. We will increase the offerings of biological drugs and expand key assets with additional indicators and new locations," Schultz concluded.
"Looking ahead, we will further transform our manufacturing network, improve profitability and generate cash, which will further reduce our debt. Improve our biopharmaceuticals supply, and expand our key assets through additional labels and new markets,"