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    TEVA
    Earnings call· Jun 2026(Q2 FY26)

    TEVA PHARMACEUTICAL INDUSTRIES Q2 FY26 earnings call TEVA

    Jul 29, 2026 Source

    Executive summary

    Teva Q2 FY26 — Strong Innovative Portfolio Drives Growth and Margin Expansion

    Teva delivered a solid Q2 FY26, with its innovative portfolio (AUSTEDO, UZEDY, AJOVY) driving significant revenue growth and expanding gross margins, despite headwinds from generic REVLIMID erosion. The company raised its full-year revenue guidance and is progressing towards its 2027 operating margin and debt targets, reflected in a recent investment-grade rating upgrade. Strategic capital allocation and a robust pipeline with multiple near-term launches underpin confidence in future growth.

    Highlights

    5

    • Innovative portfolio revenue grew 43% year-on-year, driven by AUSTEDO (+40%), UZEDY (+43%), and AJOVY (+56%).

    • Non-GAAP gross margin increased by 80 basis points to 55.4%, fueled by strong innovative growth.

    • Free cash flow was strong at $622 million, up 31% versus last year.

    • Fitch upgraded Teva to an investment-grade rating in May, marking its return to IG for the first time since 2017.

    • Full-year revenue guidance was raised by $75 million at the midpoint, reflecting strong innovative product performance.

    Concerns

    4

    • Generics revenue was down 15% year-on-year, largely due to lower generic REVLIMID contribution.

    • Q2 GAAP net loss was $576 million and loss per share was $0.49, impacted by $724 million IPR&D expenses from the Amylyx acquisition.

    • Global Generics revenue for FY26 is expected to be flat to down low single digit in local currency due to fewer high-value launches, lower seasonal OTC, and increased competition.

    • Elevated AUSTEDO channel inventory is expected to normalize in the next two quarters, with Q4 revenue anticipated to be down year-over-year due to IRA implementation.

    Guidance & targets

    18
    CategoryTargetConfidence
    Full-year revenue
    $16.5 billion to $16.8 billion
    high materiality
    High
    AUSTEDO full-year revenue
    $2.45 billion to $2.6 billion
    high materiality
    High
    AUSTEDO peak sales
    greater than $3 billion
    high materiality
    High
    UZEDY full-year revenue
    $270 million to $290 million
    medium materiality
    High
    Olanzapine LAI and UZEDY combined peak sales
    $1.5 billion to $2 billion
    high materiality
    High
    AJOVY full-year revenue
    $850 million to $870 million
    medium materiality
    High
    AJOVY peak sales
    $1 billion
    medium materiality
    High
    Innovative portfolio revenue as % of total revenue
    22%
    high materiality
    High
    Gross margins
    more than 60%
    high materiality
    High
    Generics business annual growth
    1% to 2%
    medium materiality
    Medium
    Biosimilars revenue
    exceeding our $800 million
    high materiality
    High
    Non-GAAP operating income target
    30%
    high materiality
    High
    Net debt to EBITDA
    below 2%
    high materiality
    High
    Cash conversion earnings
    80%
    medium materiality
    High
    Combined innovative products (AUSTEDO, AJOVY, UZEDY) 2026 revenue
    approximately $3.7 billion
    high materiality
    High
    Global Generics revenue
    flat to down low single digit
    medium materiality
    Medium
    Non-GAAP gross margin
    54.5% to 55.5%
    medium materiality
    High
    Operating expenses as % of revenue
    approximately 28%
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Innovative Portfolio
    Strong Q2 performance across all key innovative products, driving overall portfolio growth and margin expansion. AUSTEDO XR is contributing significantly to new patient starts and adherence. UZEDY is the fastest-growing long-acting injectable for schizophrenia. AJOVY continues to outpace market growth globally.
    AUSTEDO U.S. revenue: $676 millionAUSTEDO global revenue growth: 40% YoYAUSTEDO TRx growth: 14%AUSTEDO milligram growth: 21%AUSTEDO XR new patients: over 60%UZEDY revenue: $77 millionUZEDY TRx growth: 63% YoYUZEDY risperidone LAI market share: nearly 10% (from 5%)UZEDY risperidone LAI market capture: nearly 80%AJOVY global revenue: $244 millionAJOVY global revenue growth: 56% YoYAJOVY U.S. revenue growth: 83%
    		up 43%43%——
    Generics
    Generics revenue was impacted by lower generic REVLIMID contribution. Excluding this, the business remained stable, with slight growth in the U.S. and a decrease ex-U.S. due to fewer launches and a soft cough and cold season. Biosimilars are emerging as a key growth driver within this segment.
    Global Generics revenue (excluding REVLIMID): stableGlobal Generics revenue (excluding REVLIMID): down 2%U.S. Generics revenue (excluding REVLIMID): up 1%Ex U.S. Generics revenue (excluding REVLIMID): decreased (due to lower product launches and cost and cold season)
    		down 15%-15%——

    Operational metrics

    15
    Non-GAAP gross margin
    55.4%increase of 80 basis points
    Q2 FY26

    Reflecting strong growth in the innovative portfolio.

    Non-GAAP operating margin
    9%
    Q2 FY26

    Including the impact of MLX related expenses of $726 million.

    Non-GAAP operating margin (excluding MLX)
    26.6%slightly below Q2 last year
    Q2 FY26

    Mainly reflecting higher planned investments in sales and marketing in H1 to support innovative growth.

    Non-GAAP EPS
    $0.02
    Q2 FY26

    Reported non-GAAP EPS.

    MLX impact on EPS
    $0.61
    Q2 FY26

    Impact from Amylyx acquisition related expenses.

    Non-GAAP EPS (without MLX impact)
    $0.63
    Q2 FY26

    Calculated non-GAAP EPS excluding the MLX impact.

    Generic REVLIMID revenue contribution
    $318 million
    Q2 FY25

    Historical revenue contribution from generic REVLIMID in the prior year quarter.

    Generic REVLIMID EBITDA contribution
    $223 million
    Q2 FY25

    Historical EBITDA contribution from generic REVLIMID in the prior year quarter.

    Generic REVLIMID revenue impact
    more than $600 million
    H1 FY26

    Revenue impact from generic REVLIMID in the first half of 2026.

    Net debt
    $12.9 billion
    Q2 FY26

    Balance sheet continued to improve.

    Net debt-to-EBITDA ratio
    2.8x
    Q2 FY26

    Reported net debt-to-EBITDA ratio.

    Net debt-to-EBITDA ratio (excluding MLX)
    2.3x
    Q2 FY26

    Excluding the impact of the Amylyx acquisition, well on track to achieve 2x target by 2027.

    Revenue
    $4.9 billion
    FY22

    Historical revenue figure used as a baseline for growth comparison.

    Generic REVLIMID revenue impact (full context)
    $1.1 billion
    Prior year comp

    Context for tough prior year comparison, removing $1.1 billion revenue and $700 million equivalent EBITDA from REVLIMID.

    Generic REVLIMID EBITDA impact (full context)
    $700 million
    Prior year comp

    Context for tough prior year comparison, removing $1.1 billion revenue and $700 million equivalent EBITDA from REVLIMID.

    Industry KPIs

    11
    MetricValueDetails
    Peak sales guidancegreater than $3 billionUSD
    Prescription volumeup 14%%
    EPS revenue guidanceraised midpoint by $75 millionUSD
    Pricing policy impactexpected changes
    Pipeline clinical milestones8 major milestones
    Regulatory approvals filingsfiled with the FDA
    Therapeutic drug market sharenearly 10%%
    Price volume mix decompositionfavorable gross to net
    Geographic regional revenue growthdown 2%%
    Clinical trial efficacy safety data75%%
    Business development capacity deal appetitemore business opportunities as well as development opportunities

    Deals & partnerships

    2
    AmylyxAcquisition of Amylyx

    Closed in June. Further strengthens position in CNS. Expected launch next year if FDA approves.

    SanofiPartnership for Duvaqito development

    Phase III program for Duvaqito in ulcerative colitis and Crohn's disease is on track. Partnering on adding new indications for hydrogenitis superativa and fibrosenatic Crohn's disease.

    Risks & headwinds

    5
    Generic REVLIMID loss of exclusivityFY26

    nearly 8% of headwinds year-over-year; more than $600 million revenue impact in H1 FY26; removing $1.1 billion revenue and $700 million EBITDA from prior year comp

    Mitigation: Strong growth in innovative portfolio and biosimilars offsetting impact.

    IRA implementation impact on AUSTEDOQ4 FY26 and beyond (January 2027)

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

    Mitigation: Monitoring purchasing patterns and pricing environments; confident in ability to capture patients due to Medicare requirements and product profile.

    Trump tariffsNear-term

    Not quantified

    Mitigation: Digesting news and understanding potential impact; noting Teva's significant U.S. manufacturing presence and ongoing discussions with administration.

    Generics business softnessFY26

    FY26 Global Generics revenue expected to be flat to down low single digit in local currency

    Mitigation: Due to fewer high-value launches, lower seasonal OTC, and increased competition. Biosimilar portfolio expected to drive future growth.

    Elevated AUSTEDO channel inventoryNext 2 quarters (Q3/Q4 FY26)

    Elevated levels

    Mitigation: Expected normalization of excess inventory in H2 FY26.

    What to watch in Q3 FY26

    5

    Olanzapine LAI launch

    Q4 2026
    CurrentFDA action and U.S. launch anticipated in Q4 2026
    TargetSuccessful launch and initial payer coverage

    Why it matters

    Establishes a new growth driver in the CNS market, leveraging synergies with UZEDY, and reinforces leadership in LAIs.

    olanzapine represents a meaningful next growth opportunity with FDA action and U.S. launch anticipated in Q4 of this year.

    Q&A highlights

    9

    Inquired about confidence in AUSTEDO's formulary positioning in 2027 given IRA, and potential impact of Trump tariffs on supply chain.

    Management is confident in AUSTEDO's ability to capture patients due to Medicare requirements for negotiated products, product profile, and demand, despite IRA. They are assessing the new Trump tariff announcement but noted Teva's significant U.S. manufacturing presence.

    “all Medicare plans are required to cover negotiated products in their Part D formularies. That would be like obviously AUSTEDO XR. And so based on that, I think based on the product profile and the significant patient demand as well as the physician excitement around AUSTEDO XR. I think we remain confident in our ability to continue to make sure we can capture a significant amount of patients as we move into 2027.”

    asked by Jason Gerberry · answered by Richard Francis

    3 min read5 chapters

    Detailed Narrative

    01

    Pivot to Growth Strategy Progress

    Teva's 'Pivot to Growth' strategy, launched in 2023, demonstrated strong execution across its four pillars in Q2 FY26. The innovative portfolio is reshaping the financial profile with stronger revenue growth, margins, and free cash flow. The company is advancing its pipeline with 8 major milestones this year, including ecopipane, and expects 5 submissions over the next 5 years. Biosimilars are becoming a significant growth platform within generics, with 15 products in the market and 14 in the pipeline. Teva also made progress on capital allocation, achieving an investment-grade upgrade from Fitch and closing the Amylyx acquisition in June. The planned conversion of ADS to ordinary shares and NYSE listing in September aims to broaden investor access.

    02

    Innovative Portfolio Momentum

    Key growth drivers AUSTEDO, UZEDY, and AJOVY delivered robust Q2 performance, leading to increased full-year revenue guidance for all three. AUSTEDO's U.S. revenue reached $676 million, up 33% year-over-year, with AUSTEDO XR representing over 60% of new patients. UZEDY grew 43% to $77 million, nearly doubling its risperidone long-acting share to almost 10% and capturing 80% of the market. AJOVY's global revenue reached $244 million, up 56% year-over-year, with U.S. revenue growing 83% due to improved contracting, favorable gross-to-net, and market share gains. These products are expected to contribute approximately $3.7 billion in combined revenue for FY26, representing 17% growth over 2025.

    03

    Pipeline and Future Launches

    Teva's pipeline is poised for significant near-term launches, including olanzapine LAI in Q4 2026, ecopipane in H1 2027, and DARI between Q2 2028 and 2030, all subject to regulatory approvals. The company also announced two new indications for Duvaqito: hydrogenitis superativa and fibrosenatic Crohn's disease, expanding its IBD focus. The anti-IL-15 program for vitiligo showed promising proof-of-concept data, with 75% of patients reporting improvement, and a Phase IIb/III study initiated this year. The overall pipeline, including these new assets and indications, is projected to represent over $10 billion in peak sales.

    04

    Generics and Biosimilars Transformation

    Despite a 15% decline in generics revenue year-over-year, largely due to the impact of generic REVLIMID, Teva's generics business remained stable when excluding this factor. The biosimilar portfolio is emerging as a key growth driver, with 15 products currently in the market and 14 in the pipeline. Teva's strong execution has resulted in 2 out of its 5 U.S. biosimilar products ranking #1, with a third expected to follow. The company is on track to exceed its $800 million biosimilar revenue target by 2027, leveraging its ability to navigate complex and fragmented markets.

    05

    Financial Transformation and Capital Allocation

    Teva is undergoing a fundamental financial transformation, with revenue accelerating from $4.9 billion in 2022 to an expected $16.5 billion to $16.8 billion in 2026. Gross margins are projected to expand from 54% to over 60% by 2030. The company's disciplined capital allocation strategy has been recognized by credit rating agencies, with Fitch upgrading Teva to investment-grade. Net debt stood at $12.9 billion, with a net debt-to-EBITDA ratio of 2.8x (2.3x excluding the Amylyx impact), well on track to achieve the 2x target by 2027. These efforts are expected to drive long-term earnings and free cash flow growth.

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