Teva beats analysts on Q2 profit as CFO quits

Kare Schultz Photo: Shlomi Yosef

The Israeli pharmaceutical company's profit fell less than expected. CFO Michael McClellan announced he is stepping down.

Beset by debt, litigation in the US on price fixing and the opioid epidemic, falling Copaxone sales and Us generic prices, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) has reported better than expected second quarter financial results. At the same time CFO Michael McClellan has announced that he is stepping down.

Revenue in the second quarter of 2019 was $4.337 billion, down 8% compared wityh the second quarter of 2018. The fall was mainly due to generic competition to Copaxone, as well as declines in revenue from Treanda/Bedenka, and other specialty products in the US. The falls were partially offset by higher revenue from Austedo, Ajovy and Qvar in the US. The analysts had predicted revenue of $4.25 billion.

Non-GAAP earnings per share in the second quarter was $0.60, above the analysts' consensus of $0.57 per share.

Teva president and CEO Kåre Schultz said, “During the second quarter, portfolio optimization and new launches stabilized our North American generics business, Copaxone performed above expectations and Austedo achieved a very strong growth rate. We continue to focus our efforts on growth for Ajovy in the US and are excited by the early momentum of the product’s recent launches in the EU.”

He added, “We are on track to achieve the targets of our two year restructuring plan and based on our good results for the first half of the year we are reaffirming our full year guidance.”

However, Teva now has a negative cash flow with Schultz admitting in the subsequent conference call that all the company's cash flow is now being used to repay the debt. Teva's debt at the end of July had fallen to $25 billion.

McClellan said that he had decided to step down from his role as CFO due to personal reasons requiring him to be located near his family. Teva has initiated a search to identify its next CFO. McClellan is expected to remain in his role through the announcement of third quarter results to assist with a smooth transition.

Despite the better than expected results, Teva's share price is down another 5.40% at $6.68 on the NYSE, giving a market cap of $7.5 billion, after falling 9.83% yesterday on fresh concerns about the size of the settlement it will be required to pay for the opioid epidemic. In its financials today Teva said it had set aside $646 million to settle cases regarding opioids.

Published by Globes, Israel business news - en.globes.co.il - on August 7, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Kare Schultz Photo: Shlomi Yosef
Kare Schultz Photo: Shlomi Yosef
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