TEVA Q2 Earnings Beat, Revenues Miss on Lower Generics Sales

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01-08-2025

Teva Pharmaceutical Industries TEVA reported second-quarter 2025 adjusted earnings of 66 cents per share, which beat the Zacks Consensus Estimate of 63 cents. Adjusted earnings rose 8% year over year, driven by higher operating profits.
Revenues for the second quarter were $4.18 billion, which missed the Zacks Consensus Estimate of $4.28 billion. Total revenues were flat year over year on a reported basis and down 1% on a constant currency basis.
Revenue growth suffered as the gains from the increasing sales of its branded drugs, Austedo, Ajovy, and Uzedy, were offset by lower generic drug sales in Teva's U.S. and international markets, mainly resulting from its exit from Japan.
Branded Products Drive TEVA's US Unit's Sales
Sales in the United States segment were $2.15 billion, up 2% year over year, driven by higher revenues from Teva's branded drugs, Ajovy, Austedo and Uzedy, partially offset by a decline in generic revenues. The segment's sales missed the Zacks Consensus Estimate of $2.19 billion but beat our model estimate of $2.11 billion.
Generic/biosimilar product revenues declined 6% from the year-ago period to $961 million in the United States due to lower revenues from the generic versions of Revlimid and Victoza. Generic revenues missed the Zacks Consensus Estimate of $1.05 billion as well as our model estimate of $1.02 billion.
Teva's ne generic drugs includes Simlandi, a generic version of AbbVie's ABBV Humira, which was approved in February 2024 and launched in May. Teva also has other high-value complex generics like Selarsdi. Notably, Selarsdi is a biosimilar version of J&J's JNJ Stelara, which was approved in April 2024 and launched in February 2025, per settlement terms with J&J. Simlandi and Selarsdi are the first two biosimilars to launch in the United States under the Teva and Alvotech strategic partnership, which includes nine products.
Teva and partner Samsung Bioepis' Epysqli, a biosimilar version of AstraZeneca's Soliris, was launched in the United States in early April. Teva entered into a strategic partnership with Samsung Bioepis in January 2025 for the commercialization of Epysqli in the United States.
So far this year, shares of TEVA have plunged 23.6% compared with the industry's decline of 9.8%.
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Huntington's disease drug, Austedo, recorded sales of $495 million in the United States, up 22% year over year. Sales were mainly driven by volume growth as prescription trends continued to grow. Austedo sales missed the Zacks Consensus Estimate of $501.7 million while marginally beating our model estimate of $494.8 million.
Ajovy recorded sales of $63 million in the quarter, up 53% year over year, driven by volume growth. Ajovy sales surpassed the Zacks Consensus Estimate of $50.8 million as well as our model estimate of $42.6 million.
Uzedy (risperidone), a long-acting subcutaneous atypical antipsychotic injection for the treatment of schizophrenia, generated sales of $54 million in the second quarter, up 120% year over year, mainly driven by volume growth.
Copaxone recorded sales of $62 million in the United States, down 23% year over year, mainly due to market share erosion and competition. Copaxone sales beat the Zacks Consensus Estimate of $48.8 million as well as our model estimate of $45.8 million.
Performance of TEVA's Europe and International Market Units
The Europe segment recorded revenues of $1.3 billion, up 7% year over year on a reported basis. Sales were up 3% on a constant currency basis, mainly driven by the sale of certain product rights, higher revenues from Ajovy and generic products. Europe revenues beat the Zacks Consensus Estimate as well as our model estimate of $1.25 billion.
In the International Markets segment, sales declined 17% year over year to $495 million. In constant currency terms, sales decreased 16% year over year, mainly due to the divestment of Teva's business venture in Japan. International Markets revenues missed the Zacks Consensus Estimate of $602.4 million as well as our model estimate of $651.3 million.
The Other segment (comprising the sales of active pharmaceutical ingredients to third parties and certain contract manufacturing services) recorded revenues of $232 million, down 7% year over year on a reported basis and down 9% year over year on a constant currency basis.
TEVA's Margin Discussion
Adjusted gross margin was 54.6% for the quarter, up 170 basis points (bps) year over year. The rise is mainly driven by higher Austedo revenues, the sale of certain product rights in Europe and the divestment of the business venture in Japan, partially offset by lower Copaxone revenues.
Adjusted research & development expenses decreased 9% year over year to $244 million. Selling and marketing expenditure was comparatively flat year over year at $654 million. General and administrative expenses increased 8% from the prior-year level to $305 million.
Adjusted operating income rose 7% year over year in the second quarter to $1.13 billion. Adjusted operating margin increased 180 bps to 27.1% in the quarter, mainly due to higher gross profit margin as well as lower operating expenses as a percentage of revenues. Teva expects an adjusted operating margin of 30% by 2027 to be achieved by cost savings and the continued growth of its branded drugs.
Teva Pharmaceutical Industries Ltd. Price, Consensus and EPS Surprise
Teva Pharmaceutical Industries Ltd. price-consensus-eps-surprise-chart | Teva Pharmaceutical Industries Ltd. Quote
TEVA Updates Guidance for 2025
Teva continues to expect its total revenues in 2025 to be in the range of $16.8-$17.2 billion.
Teva raised the lower end of its expectation for Austedo from $1.95-$2.05 billion to $2-$2.05 billion. The company also raised its full-year guidance for Ajovy sales from $600 million to the range of $630-$640 million. Uzedy guidance has been raised from $160 million to the range of $190-$200 million in 2025. Copaxone guidance was maintained at $370 million.
Teva expects adjusted EPS to be in the range of $2.5-$2.65 per share in 2025 compared with the prior expectation of $2.45-$2.65.
The company continues to expect its adjusted operating income to be in the range of $4.3-$4.6 billion in 2025. Adjusted EBITDA was maintained in the range of $4.7-$5 billion.
TEVA's Zacks Rank
Teva currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here
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