Teva 2Q report shows weak North American revenues and shares slump
Teva Pharmaceutical Industries (NYSE:TEVA) said second quarter North American revenue slid 29% and gross profit slumped because of increased competition to its multiple sclerosis drug and generic business in its largest market in the US, with shares tumbling on Thursday as a result.
Shares of Teva fell 8.23% to trade US$1.97 down at US$21.91 in late afternoon trade.
Israel-based Teva said revenues in the second quarter of 2018 declined because of price erosion in the US generics business, generic competition to the drug Copaxone which is used to treat multiple sclerosis and the loss of revenue after divestment in certain products and discontinuation of some activities.
“Revenues from our North America segment in the second quarter of 2018 were US$2.3 billion, a decrease of US$906 million, or 29%, compared to the second quarter of 2017, mainly due to a decline in revenues of Copaxone as well as an equally significant decline in revenues in our US generics business and the loss of revenues from the sale of our women’s health business,” it said in a statement.
READ:Teva shares surge on news of further restructuring, massive job cuts
Despite the company’s poorly received quarterly performance, Maxim Group analyst Jason McCarthy kept a hold recommendation for the firm.
He said that Teva’s 2Q results did have some positives such as restructuring and cost savings and an improved guidance among others. “However, an eroding generics business and debt continue to weigh on the stock,” McCarthy said.
“Generic business is under pressure due to acceleration of competing generics being approved and pricing pressure in the US market. The impact of Copaxone going generic is also playing a more significant role though Teva’s market share in the US is stable, relative to 1Q 2018,” the Maxim analyst added.
The weak sales were partially offset by higher revenues from the Austedo drug to treat movement disorders and the company’s distribution business, Teva said.
The GAAP gross profit was at US$2.1 billion in the second quarter of 2018, down 28% compared to the second quarter of 2017. Non-GAAP gross profit was US$2.4 billion, off by 27% from the second quarter of 2017. Non-GAAP gross profit margin was 50.4% in the second quarter of 2018, compared to 57.0% in the same quarter in 2017.
“The decrease in gross profit margin, on both a GAAP and a non-GAAP basis, resulted primarily from price erosion in our US generics business and a decline in Copaxone revenues due to generic competition, as well as the loss of revenue following the sale of our women’s health business,” Teva said.
Story by ProactiveInvestors
Source: http://www.proactiveinvestors.com/companies/news/202116/teva-2q-report-shows-weak-north-american-revenues-and-shares-slump-202116.html
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