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A Financial Overview of Teva Pharmaceutical in December

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Dec. 27 2018, Updated 11:40 a.m. ET

Revenue trends

In the first nine months of 2018, Teva Pharmaceutical’s (TEVA) net revenue fell 16% YoY (year-over-year) to $14.3 billion from $17.0 billion.

In the third quarter, the company’s revenue fell ~19% YoY to $4.5 billion from $5.6 billion. After the third quarter, the company updated its financial guidance for 2018. Teva now expects its net revenue for the year to be $18.6 billion–$19.0 billion.

Analysts expect Teva Pharmaceutical to generate fourth-quarter revenue of $4.5 billion, a ~16.99% YoY fall. Analysts expect the company to report net revenue of $18.8 billion in 2018.

In comparison, Teva Pharmaceutical’s generic pharmaceutical peers Allergan (AGN), Mylan (MYL), and Bausch Health (BHC) reported revenues of $3.9 billion, $2.9 billion, and $2.1 billion, respectively, representing YoY falls of ~3.0%, ~4.17%, and ~3.74%.

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Cash flows

Teva Pharmaceutical reported free cash flow of $704.0 million in the third quarter compared to $920.0 million in the same period last year. Its lower net income primarily led to the fall in its free cash flow in the third quarter. However, after the quarter, Teva raised its free cash flow guidance for 2018.

Teva Pharmaceutical expects free cash flow in the range of $3.6 billion–$3.8 billion. The company had previously put its cash flow guidance in the range of $3.2 billion–$3.4 billion.

Expense trends

In the first nine months of 2018, Teva Pharmaceutical’s cost of goods sold amounted to $7.9 billion, reflecting a ~9% YoY fall. In this period, the company’s research and development, selling and marketing, and general and administrative expenses amounted to $918.0 million, $2.2 billion, and $954.0 million, respectively, reflecting falls of ~36%, ~19%, and ~19%, respectively.

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