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    TEVA
    Earnings call· Sep 2025(Q3 FY25)

    TEVA PHARMACEUTICAL INDUSTRIES LTD TEVA

    Nov 5, 2025 Source

    Executive summary

    Teva Q3 FY25 — Strong Innovative Portfolio Drives 11th Consecutive Quarter of Growth

    Teva delivered its eleventh consecutive quarter of growth, primarily fueled by its innovative product portfolio, which saw significant year-over-year expansion. The company reaffirmed its 2027 financial targets, including mid-single-digit revenue growth and a 30% operating margin, supported by ongoing cost transformation programs and a strengthening balance sheet. While the TAPI divestiture faced a setback, management is re-initiating the sale process, emphasizing its non-strategic nature to the 'pivot to growth' strategy.

    Highlights

    5

    • Achieved 11th consecutive quarter of revenue growth, up 3% to $4.5 billion.

    • Innovative products revenue grew 33% year-on-year, reaching over $800 million for the quarter.

    • AUSTEDO US revenue reached $601 million in Q3 FY25, growing 38% year-over-year, with full-year outlook raised to $2.05B-$2.15B.

    • Net debt to EBITDA dropped below 3x for the first time since 2016, reaching 2.8x by year-end FY25.

    • Non-GAAP EPS increased 14% year-over-year to $0.78.

    Concerns

    4

    • TAPI divestiture discussions with initial buyer terminated due to inability to reach an agreement aligned with long-term priorities.

    • European generics revenue declined 5% due to tough prior-year comparisons and fewer launches.

    • Q3 FY25 free cash flow decreased to $515 million compared to $922 million in Q3 FY24, mainly due to timing of sales/collections and higher legal settlement payments.

    • Global generics revenue expected to be flat in local currency for full-year FY25 compared to FY24.

    Guidance & targets

    22
    CategoryTargetConfidence
    AUSTEDO Revenue Target
    $2.5 billion
    high materiality
    High
    AUSTEDO Peak Sales Target
    over $3 billion
    high materiality
    High
    AUSTEDO Full-Year Revenue Outlook
    $2.05 billion to $2.15 billion
    high materiality
    High
    UZEDY LAI Franchise Peak Sales Target
    $1.5 billion to $2 billion
    high materiality
    High
    AJOVY Full-Year Revenue Outlook
    $630 million to $640 million
    medium materiality
    High
    Biosimilars Revenue Contribution
    another $400 million
    medium materiality
    High
    Teva Transformation Program Savings
    $700 million
    high materiality
    High
    Full-Year Revenue Growth
    3% to 4%
    high materiality
    High
    Operating Margin Target
    30%
    high materiality
    High
    Net Debt to EBITDA Target
    2x
    high materiality
    High
    Full-Year Revenue Guidance
    $16.8 billion and $17 billion
    high materiality
    High
    Non-GAAP Gross Margin Outlook
    higher end of 53% to 54%
    medium materiality
    High
    Operating Expenses as % of Revenue
    between 27% and 28%
    medium materiality
    High
    Free Cash Flow Guidance
    $1.6 billion to $1.9 billion
    high materiality
    High
    duvakitug Development Milestone Revenue
    $250 million
    medium materiality
    High
    duvakitug Development Milestone EBITDA & FCF
    $200 million
    medium materiality
    High
    duvakitug Development Milestone EPS
    $0.14
    medium materiality
    High
    Teva Transformation Program Savings Realization
    2/3 of $700 million
    high materiality
    High
    Teva Transformation Program Initial Savings
    approximately $70 million
    medium materiality
    High
    Teva Transformation Program Cash Outflow
    $70 million to $100 million
    low materiality
    High
    Global Generics Revenue Growth
    flat
    medium materiality
    High
    UZEDY Q4 Implied Guidance
    $55 million to $65 million
    low materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Innovative Products
    Spearheaded overall revenue growth, with strong performance across all key innovative brands.
    AUSTEDO Revenue: $618MAUSTEDO Growth: 38% YoYUZEDY Revenue: $43MUZEDY Growth: 24% YoYAJOVY Revenue: $168MAJOVY Growth: 19% YoY
    		$800M+33%——
    Global Generics
    Growth fueled by launches, biosimilars, and OTC business. Looked at over a 2-year CAGR due to inherent timing of new launches.
    		—2%——
    US Generics
    Driven by several launches, strong biosimilar performance, and phasing patterns for generic Revlimid (not to same magnitude in Q4).
    		—7%——
    Europe Generics
    Mainly due to tough comparisons to prior year with numerous launches and tender wins (2-year periods).
    2-year CAGR: 1%
    		—-5%——
    International Markets Generics
    Solid growth in international markets.
    2-year CAGR: 12%
    		—3%——
    TAPI
    Reflecting some seasonal volatility.
    		—-4%——

    Operational metrics

    22
    Adjusted EBITDA
    6%YoY increase
    Q3 FY25

    Compared to Q3 FY24.

    Non-GAAP EPS
    14%YoY increase
    Q3 FY25

    Compared to Q3 FY24.

    Net Debt to EBITDA
    below 3xfirst time since 2016
    Q3 FY25

    Reached below 3x for the first time since Q3 2016.

    AUSTEDO TRx Growth
    11%
    Q3 FY25

    Reflecting continued strong performance.

    AUSTEDO Milligrams Dispensed Growth
    25%
    Q3 FY25

    Important metric due to increasing penetration of AUSTEDO XR requiring fewer scripts.

    UZEDY TRx Growth
    119%
    Q3 FY25

    Strong momentum in UZEDY performance.

    Schizophrenia Patient Population (US & Europe)
    4.7 million
    Current

    Significant unmet need for long-acting treatments.

    Preventative CGRP Injectable Market Share
    #1
    Q3 FY25

    AJOVY is #1 among top US headache centers.

    Preventative CGRP Injectable Market Share
    #1
    Q3 FY25

    AJOVY is #1 in 30 countries across Europe and international markets.

    Innovative Pipeline Peak Sales Potential
    over $11 billion
    Future

    Significant growth drivers for the future, based on late-stage assets.

    Biosimilars In-line Assets
    10
    Current

    Globally, with potential to launch 6 more through 2027.

    Non-GAAP Gross Margin
    55.3%increased 120 bps YoY
    Q3 FY25

    Slightly higher than expected, mainly due to strong AUSTEDO growth.

    Non-GAAP Operating Margin
    28.9%increased 70 bps YoY
    Q3 FY25

    Strong performance largely carried through from gross margin.

    Total Non-GAAP Adjustment
    $478 million
    Q3 FY25

    Total non-GAAP adjustment in the third quarter of 2025.

    Teva Transformation Program Restructuring Costs
    $190 million
    YTD

    Recorded year-to-date in relation to the transformation programs.

    FX Impact on Revenue
    $106 millionpositive impact
    Q3 FY25

    FX movement during the quarter, including hedging effects, positively impacted revenue.

    FX Impact on Operating Income
    $21 millionpositive impact
    Q3 FY25

    FX movement during the quarter, including hedging effects, positively impacted operating income.

    AUSTEDO Full-Year Growth
    21% to 27%YoY
    FY25

    Reflecting the increased full-year outlook for AUSTEDO.

    Tardive Dyskinesia Untreated Patient Population
    85%
    Current

    85% of patients suffering from tardive dyskinesia are not on therapy, representing a significant unmet need.

    Prior AUSTEDO Peak Sales Forecast
    $1.4 billion
    2023

    Original peak sales forecast for AUSTEDO when the 'pivot to growth' journey began in 2023.

    Debt Maturity (October 2026)
    $1.8 billion
    October 2026

    Next significant debt maturity after 13 months from Q3 FY25.

    Debt Maturity (March/May 2027)
    $2.8 billion
    March/May 2027

    Subsequent debt maturity in early 2027.

    Industry KPIs

    11
    MetricValueDetails
    Peak sales guidanceover $3 billionUSD
    Prescription volume11%%
    EPS revenue guidance$16.8B-$17BUSD
    Pricing policy impactconsistent with expectations
    Pipeline clinical milestones5 late-stage assetsassets
    Regulatory approvals filingsUZEDY label expansion
    Therapeutic drug market share#1ranking
    Price volume mix decomposition—
    Geographic regional revenue growth7%%
    Clinical trial efficacy safety datano cases of PDSS
    Business development capacity deal appetite—

    Risks & headwinds

    6
    TAPI Divestiture FailureQ3 FY25

    Exclusive discussions with initial buyer terminated

    Mitigation: Initiating a renewed sale process, citing recent geopolitical environment and market conditions reinforcing TAPI's attractiveness. Will ensure any future contract secures API supply for Teva's in-line products and pipeline.

    European Generics DeclineQ3 FY25

    -5% YoY growth in Q3 FY25

    Mitigation: Anticipate biosimilar launches in EU to build momentum post-2027; view generics business over a 2-year CAGR to smooth out volatility from launches and tender periods.

    Free Cash Flow DecreaseQ3 FY25

    $515 million in Q3 FY25 vs $922 million in Q3 FY24

    Mitigation: Mainly due to timing of sales and collection as well as higher legal settlement payments, which were planned and reflected in full-year guidance. Full-year FCF guidance remains $1.6B-$1.9B.

    Generic Revlimid SeasonalityQ4 FY25

    Majority of volume allocation sold by end of Q3 FY25

    Mitigation: Implies slightly lower non-GAAP gross margin in Q4 compared to Q3. Company has other generics, complex, and OTC drivers to compensate for Revlimid roll-off by end of 2027.

    Potential US Tariffs on PharmaceuticalsOngoing

    Outcome of ongoing 232 investigation

    Mitigation: Encouraged by statements from administration regarding possible generics exemptions. 2025 guidance already reflects confirmed tariffs in place.

    UZEDY Medicaid Gross-to-Net AdjustmentQ3 FY25

    One-time impact on Q3 FY25 revenue growth

    Mitigation: Does not impact long-term LAI franchise expectations; Q4 implied guidance of $55M-$65M provides a cleaner run rate for forecasting.

    What to watch in Q4 FY25

    5

    Olanzapine LAI FDA Submission

    next quarter
    CurrentOn track for late Q4 FY25 submission
    TargetConfirmation of FDA submission

    Why it matters

    Successful submission is a key regulatory milestone for a significant pipeline asset, potentially expanding the LAI franchise.

    Now beginning with olanzapine LAI, we're on track for our FDA submission later in this quarter.

    Q&A highlights

    8

    Asked for additional color on internal expectations for IRA negotiations and how the negotiated price relates to current Medicare net price, given the reiteration of long-term AUSTEDO guidance.

    Management stated the agreement was in line with their 2023 forecast, reaffirming confidence in the $2.5 billion 2027 revenue target and over $3 billion peak sales. They declined to comment on specific net price details but emphasized the large unmet need in tardive dyskinesia (85% untreated patients) as a key growth driver.

    “As I mentioned on the call, how it met with our expectations, it was in line with what we had forecast when we set the forecast back in May 2023. So we had anticipated that we would be in the list, and we would be negotiating with CMS.”

    asked by Yuchen Ding · answered by Richard Francis

    2 min read6 chapters

    Detailed Narrative

    01

    Pivot to Growth Strategy Progress

    Teva's 'pivot to growth' strategy, now in its third year, continues to drive performance across its four pillars. The company reported its 11th consecutive quarter of revenue growth, with adjusted EBITDA up 6% and non-GAAP EPS up 14% compared to Q3 2024. This consistent execution positions Teva to achieve its mid-single-digit growth targets set for 2027, demonstrating the effectiveness of its portfolio and team efforts.

    02

    Innovative Portfolio Momentum

    The innovative product portfolio, comprising AUSTEDO, UZEDY, and AJOVY, was the primary growth driver, contributing over $800 million in revenue for the quarter, a 33% year-on-year increase. AUSTEDO's US revenue surpassed $600 million for the first time, growing 38%, while UZEDY saw 24% revenue growth and 119% TRx growth. AJOVY also performed strongly, up 19%, maintaining its leadership in key markets. This strong performance underpins confidence in future growth and margin expansion.

    03

    Pipeline Advancement and Future Growth Drivers

    Teva is making significant progress in its late-stage innovative pipeline, with potential peak sales exceeding $11 billion from assets like olanzapine LAI, DARI, duvakitug, emrusolmin, and anti-IL-15. Olanzapine LAI is on track for FDA submission this quarter, and duvakitug has initiated Phase III studies for ulcerative colitis and Crohn's disease. The expansion of UZEDY's label for bipolar I disorder and the potential of the long-acting olanzapine to treat up to 80% of schizophrenia patients highlight future market opportunities.

    04

    Generics and Biosimilars Business Evolution

    The generics business grew 2% over 2024, supported by new launches and strong biosimilar performance, particularly in the US (up 7%). While European generics faced tough comparisons and declined 5%, the company is entering an exciting period for its biosimilars portfolio, with 10 in-line assets globally and 6 more potential launches through 2027. This is expected to add another $400 million by 2027, with European biosimilar momentum building post-2027.

    05

    Teva Transformation and Financial Strength

    The Teva transformation program is on track to deliver $700 million in net savings by 2027, with approximately half of the $70 million 2025 savings already achieved. This, combined with portfolio shift towards high-margin innovative products, provides a clear path to a 30% operating margin by 2027. The company also significantly strengthened its balance sheet, reducing net debt to below $15 billion and achieving a net debt-to-EBITDA ratio below 3x, targeting 2x by 2027.

    06

    TAPI Divestiture Update

    Teva terminated exclusive discussions for the sale of TAPI as an agreement aligned with the company's long-term priorities could not be reached. Despite this, TAPI is still viewed as a valuable but non-strategic asset. The company is initiating a renewed sale process, citing recent geopolitical and market condition shifts that reinforce TAPI's attractiveness to potential buyers, while ensuring any future contract secures API supply for Teva's in-line products and pipeline.

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