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    TEVA
    Earnings call· Mar 2026(Q1 FY26)

    TEVA PHARMACEUTICAL INDUSTRIES Q1 FY26 earnings call TEVA

    Apr 29, 2026 Source

    Executive summary

    Teva Q1 FY26 — Strong Innovative Portfolio Growth and Strategic Emalex Acquisition

    Teva delivered a solid first quarter, driven by robust growth in its innovative portfolio, notably AUSTEDO, UZEDY, and AJOVY, which helped offset expected declines in generic revenues. The company announced the strategic acquisition of Emalex Bioscience, adding a promising Tourette syndrome asset to its CNS franchise, while reaffirming its 2026 outlook and commitment to 2027 financial targets and balance sheet discipline.

    Highlights

    5

    • Innovative portfolio revenue (AUSTEDO, UZEDY, AJOVY) grew 41% to $578 million.

    • UZEDY revenue increased 62% year-on-year to $63 million, driven by 75% TRx growth.

    • Free cash flow grew 76% to $188 million in Q1 FY26.

    • Non-GAAP gross margin reached 52.9%, exceeding expectations due to strong innovative product mix.

    • Acquisition of Emalex Bioscience for $700 million upfront adds a first-in-class Tourette syndrome asset with an anticipated 80% gross margin profile.

    Concerns

    4

    • Global generics revenue decreased 13%, primarily due to generic Revlimid.

    • Non-GAAP operating margin decreased 50 basis points year-over-year to 24% due to higher planned sales and marketing investments.

    • AUSTEDO revenue in Q4 FY26 is expected to be down year-over-year due to anticipated IRA implementation impacts in January 2027.

    • The Emalex acquisition will result in approximately $775 million in additional expenses in 2026 ($700 million IPR&D, $75 million operating expenses).

    Guidance & targets

    25
    CategoryTargetConfidence
    Transformation program savings
    $700 million
    medium materiality
    High
    AUSTEDO revenue
    $2.4 billion to $2.55 billion
    high materiality
    High
    UZEDY revenue
    Reiterated guidance
    medium materiality
    High
    FY27 Revenue growth
    mid-single digit
    high materiality
    High
    FY27 Non-GAAP operating income
    30%
    high materiality
    High
    FY27 Net debt to EBITDA
    less than 2%
    high materiality
    High
    FY27 Cash to earnings
    80%
    medium materiality
    High
    Emalex acquisition closing
    late Q2 or early Q3
    medium materiality
    High
    Ecopipam gross margin profile
    approximately 80%
    medium materiality
    High
    Emalex non-GAAP EPS accretion
    accretive
    medium materiality
    High
    FY26 outlook
    reaffirmed
    high materiality
    High
    FY26 restructuring cash outflow
    $90 million to $100 million
    medium materiality
    High
    FY26 Free cash flow
    $2 billion to $2.4 billion
    high materiality
    High
    FY26 Effective tax rate
    16% to 19%
    medium materiality
    High
    FY26 Non-GAAP gross margin
    54.5% to 55.5%
    high materiality
    High
    FY26 Operating expenses as % of revenue
    27% to 28%
    medium materiality
    High
    FY26 Operating expenses as % of revenue (with Emalex)
    towards the higher end of 27% to 28% range
    medium materiality
    High
    FY26 Revenue progression
    gradually increase over the course of the year
    medium materiality
    Medium
    Q4 FY26 AUSTEDO revenue
    down year-over-year
    high materiality
    High
    FY26 Non-GAAP margins progression
    gradually ramp up over the course of the year
    medium materiality
    Medium
    Q4 FY26 Non-GAAP margins
    stable in Q4 versus Q3
    medium materiality
    Medium
    AUSTEDO peak sales
    over $3 billion
    high materiality
    High
    Ecopipam regulatory filing
    expected in the second half of 2026
    medium materiality
    High
    Emalex revenue growth
    driving revenue growth starting in 2027
    medium materiality
    High
    Net debt to EBITDA target
    2x
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Global Generics
    Mainly due to generic Revlimid. Flat when excluding Japan and generic Revlimid.
    Growth excluding generic Revlimid: Flat
    		—-13%——
    US Generics
    Increase driven mainly by higher revenues from the biosimilar portfolio.
    Growth excluding Revlimid: +10%
    		—-28%——
    EU Generics
    Due to seasonality of some products and launches.
    		—-1%——
    International Markets Generics
    Excluding Japan.
    		—-9%——
    JV
    Performed well, growing at 35%.
    		GBP 196 million+35%——

    Operational metrics

    34
    Non-GAAP EPS
    $0.53+2% YoY
    Q1 FY26

    Compared to $0.52 in Q1 FY25.

    Non-GAAP Gross Margin
    52.9%
    Q1 FY26

    Better than expectation, driven by strong innovative products and favorable generics mix.

    Non-GAAP Operating Margin
    24%-50 bps YoY
    Q1 FY26

    Mainly due to higher planned investment in sales and marketing for innovative growth.

    Net Debt to EBITDA
    2.42x
    Q1 FY26

    Progress towards target leverage of 2x.

    Underlying Revenue Growth (ex-Japan/Revlimid)
    7%
    Q1 FY26

    Compared to Q1 FY25, excluding $75 million Japan business venture and $300 million generic Revlimid.

    Underlying Adjusted EBITDA Growth (ex-Japan/Revlimid)
    28%
    Q1 FY26

    Compared to Q1 FY25, excluding Japan business venture and generic Revlimid.

    Underlying Operating Margin
    26.8%
    FY25

    Ahead of initial expectations for 2025.

    Innovative Portfolio Revenue Mix
    over 20%from 9% in 2022
    Q1 FY26

    Reflects transition to a world-leading biopharma company.

    AUSTEDO XR New Patients
    over 60%
    Q1 FY26

    Shift towards once-daily AUSTEDO XR driving franchise durability.

    UZEDY NBRx from Orals/Naive
    over 86%
    Q1 FY26

    Positioned as LAI of choice, with NBRx coming from patients transitioning from orals or naive to antipsychotic therapy.

    Biosimilar Products on Market
    11+
    Q1 FY26

    Portfolio increased by over 50% in the last 3 years.

    Biosimilar Originated Brand Sales Coverage (by 2027)
    $16 billion
    by 2027

    Expected sales of originated brands covered by current biosimilar portfolio.

    Biosimilar Originated Brand Sales Coverage (after 2027)
    $58 billion
    after 2027

    Expected sales of originated brands covered by 9 additional biosimilar products.

    Q1 FY25 Japan Business Venture Revenue
    $75 million
    Q1 FY25

    Divested on March 31, 2025.

    Q1 FY25 Generic Revlimid Revenue
    $300 million
    Q1 FY25

    Contribution from generic Revlimid in the prior year.

    Restructuring Costs Recorded
    $205 million
    FY25

    Related to transformation programs.

    Restructuring Cash Outflow
    $100 million
    FY25

    Related to transformation programs.

    Restructuring Costs Recorded
    $25 million
    Q1 FY26

    Additional costs recorded in Q1 FY26.

    Emalex Upfront Consideration
    $700 million
    Q1 FY26

    Will flow through R&D line as IPR&D expenses.

    Emalex Commercial Milestones
    up to $200 million
    Future

    Additional potential payments.

    Cash Balance
    $3.7 billion
    End of Q1 FY26

    Strong balance sheet.

    Debt Payment
    $1.8 billion
    by October

    Next tranche payment.

    Revolver Capacity
    $1.8 billion
    Q1 FY26

    Available for flexibility.

    Tourette Syndrome Pediatric Patients
    ~100,000
    Current

    Total patient population.

    Tourette Syndrome Patients on Therapy
    ~50,000
    Current

    Only about half of patients are treated.

    Tourette Syndrome Patients Staying on Therapy (1 year)
    <30%
    1 year

    Low retention rate with current therapies.

    Ecopipam Suicidality Rates
    extremely lowbalanced within placebo-controlled parts
    Clinical trials

    No signal with intense monitoring.

    Ecopipam Open-Label Extension 1-Year Retention
    66%vs 20-23% for normal antipsychotic treatment
    1 year

    Highlights favorable tolerability and patient adherence.

    DARE Phase III FLAIR Enrollment
    >2,700
    Completed

    Large study including pediatrics and adolescents.

    DARE Pediatric/Adolescent Asthma Patients
    25%
    Current

    Represents the proportion of asthma patients who are pediatric/adolescent.

    DARE Phase III FLAIR Events Occurred
    >60%
    Current

    On track for end-of-year completion of events.

    Anti-IL-15 Vitiligo Study Duration
    24 weeks
    Clinical trial

    Readout for VAS score expected end of H1.

    Anti-IL-15 Celiac Disease Study Duration
    12 weeks
    Clinical trial

    Readout for gut protection expected H2.

    Potential Cash Balance (Eli's calculation)
    EUR 5.7 billion
    Mid-year

    Calculated from Q1 cash, FCF, and Emalex closing, before debt payment.

    Industry KPIs

    13
    MetricValueDetails
    Peak sales guidance—
    Prescription volume—
    EPS revenue guidance—
    Pricing policy impact—
    Product franchise net sales$578 millionUSD
    Pipeline clinical milestones7milestones
    Regulatory approvals filings—
    Therapeutic drug market share—
    Price volume mix decomposition—
    Geographic regional revenue growth—
    Clinical trial efficacy safety data—
    Patent expiry loe biosimilar erosion—
    Business development capacity deal size appetitecouple of hundreds of millionsUSD

    Deals & partnerships

    1
    Emalex Bioscienceacquisition$700 million upfront cash, up to $200 million commercial milestones

    Acquisition of IkaPipelane, a first-in-class asset for Tourette syndrome. Highly aligned with Pivot to Growth strategy, leveraging Teva's CNS capabilities. No impact on 2x net debt to EBITDA target by 2027.

    Risks & headwinds

    4
    Impact of IRA implementation on AUSTEDO revenueQ4 FY26 and FY27

    Q4 FY26 AUSTEDO revenue expected to be down year-over-year

    Mitigation: Monitoring channel dynamics and pricing environment; long-term confidence in AUSTEDO's growth remains.

    Elevated channel inventory levelsFY26

    May see dynamics evolve during the rest of the year

    Mitigation: Monitoring inventory levels; underlying leading indicators for AUSTEDO remain strong.

    Additional expenses from Emalex acquisitionFY26

    Approximately $775 million in 2026 ($700 million IPR&D, $75 million operating expenses)

    Mitigation: Included in guidance; higher operating expenses in 2027 expected to be absorbed by initial Ecopipam revenue uptake and additional efficiency measures.

    Geopolitical situation in the Middle EastOngoing

    Nominal increase on some spend related to transportation and energies

    Mitigation: Operations remain uninterrupted with no material impact on 2026 guidance; closely monitoring the situation.

    Q&A highlights

    5

    Could you elaborate on the synergies between the Emalex acquisition and Teva's CNS franchise, particularly on the pediatric side? Also, what is the peak sales potential for Ecopipam, and what assumptions support that?

    Richard Francis highlighted the significant unmet medical need in pediatric Tourette's, with low treatment rates and adherence, similar to previous successes with AUSTEDO and UZEDY. He noted synergies across patient services, managed markets, MSLs, and a small pediatric sales force. While not providing specific peak sales guidance, he emphasized the significant opportunity given the unmet need and Teva's expertise in movement disorders.

    “We will have to put in place a small pediatric sales force to focus on nicotine. That said, it is worth noting just the deep expertise we have in movement disorders here at ever.”

    asked by Louise Chen · answered by Richard Francis

    2 min read5 chapters

    Detailed Narrative

    01

    Emalex Acquisition and Tourette Syndrome Opportunity

    Teva announced the acquisition of Emalex Bioscience, gaining ownership of IkaPipelane, a first-in-class asset for Tourette syndrome. This pediatric neurological disorder has significant unmet medical need, with only about half of patients currently treated and less than 30% remaining on therapy after one year due to tolerability issues with existing antipsychotics. Teva plans to leverage its strong CNS capabilities in sales, marketing, and patient services to drive penetration and growth for Ecopipam, which offers meaningful efficacy with a favorable side effect profile.

    02

    Innovative Portfolio Driving Growth and Margin Expansion

    The company's innovative portfolio, including AUSTEDO, UZEDY, and AJOVY, continues to be a primary growth driver, with these products collectively growing 41% year-over-year. This shift towards higher-margin innovative products is fundamentally changing Teva's gross margin profile, with an anticipated gross margin of over 60% by 2030. AUSTEDO XR, the once-daily formulation, now accounts for over 60% of new patients, contributing to franchise durability.

    03

    Pipeline Progress and Upcoming Milestones

    Teva's R&D pipeline is progressing with 7 milestone readouts expected in 2026, including positive duvakitug maintenance data and upcoming anti-IL-15 data for vitiligo and celiac disease. The dual action rescue inhaler (DARE) program has completed enrollment for its large Phase III FLAIR study, with over 60% of events already occurred. The olanzapine LAI program saw an EU submission and is under FDA review, with approval anticipated by year-end.

    04

    Generics and Biosimilars Evolution

    While global generics revenue was down 13% (or flat excluding Japan and generic Revlimid), the U.S. generics segment saw a 10% increase excluding Revlimid, driven by the growing biosimilar portfolio. Teva now has over 11 biosimilar products on the market, covering $16 billion in originated brand sales by 2027, with another 9 products targeting $58 billion in sales thereafter. This represents a more than 50% increase in the biosimilar portfolio over the last three years.

    05

    Capital Allocation and Financial Discipline

    Teva maintains a disciplined capital allocation strategy focused on driving its Pivot to Growth. The Emalex acquisition aligns with this, being value-accretive without compromising the 2x net debt to EBITDA target by 2027. The company ended Q1 with $3.7 billion in cash and is planning for a potential share repurchase program, reflecting its commitment to enhancing shareholder value while preserving financial flexibility for strategic investments.

    AI-generated summary of the company’s earnings call. Not investment advice.