Please ensure Javascript is enabled for purposes of website accessibility

What's Behind Teva's Mixed Q1 Results

By Keith Speights - Apr 28, 2021 at 10:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Increased competition for several of its top products continued to affect the drugmaker's performance in Q1.

Teva Pharmaceuticals (TEVA 4.92%) started off 2021 with a bang. Its shares soared more than 30% during the first few weeks of the year. Since then, though, Teva has given up most of those gains. 

The company had an opportunity for a catalyst when Teva announced its first-quarter results before the market opened on Wednesday. However, those results didn't spark a rebound: The pharmaceutical stock slipped almost 3% in early trading. Here are the highlights from Teva's Q1 update. 

Scientist holding up a pill with gloved hand.

Image source: Getty Images.

By the numbers

Teva reported revenue in the first quarter of $3.98 billion, a 9% year-over-year decline. This result narrowly missed the average analysts' revenue estimate of $4.02 billion.

The company announced Q1 net income of $77 million, or $0.07 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Teva posted GAAP earnings of $69 million, or $0.06 per share.

On a non-GAAP (adjusted) basis, Teva's net income in the first quarter came in at $699 million, or $0.63 per share. This reflected a sharp decrease from adjusted earnings of $835 million, or $0.76 per share, posted in the prior-year period. However, it topped the consensus Wall Street adjusted earnings estimate of $0.59 per share.

Behind the numbers

There were several culprits behind Teva's revenue decline in the first quarter. Revenue for generic products in Europe fell 16% year over year in large part due to customers stocking up in the first quarter of 2020 because of the COVID-19 pandemic. Sales of multiple sclerosis drug Copaxone slid in both Europe and North America with increased competition from generic rivals.

Teva's cancer drug Bendeka/Treanda also faced headwinds. North American sales for the drug in Q1 plunged 14% to $91 million due to increased competition.

The company had a few bright spots, though. Rare disease drug Austedo generated sales of $146 million in the first quarter, a 20% year-over-year jump. Sales of migraine drug Ajovy rose 8% year over year to $31 million. That gain is especially notable considering that Amgen reported a 7% sales decline for its migraine drug, Aimovig, in its Q1 update

Teva kept its spending under control, though. Total operating expenses were essentially flat year over year at $1.13 billion. The company recorded much larger intangible asset impairment charges in the prior-year period, though, which boosted year-over-year GAAP earnings comparisons.

Looking ahead

Teva confirmed its previous guidance of net revenue for full-year 2021 between $16.4 billion and $16.8 billion. It also continues to anticipate earnings per share of between $2.50 and $2.70. 

The easing of COVID-19 concerns could enable Teva to promote Ajovy and Austedo to physicians more effectively by allowing increased contact with physicians. As more restrictions are lifted, sales for some of the company's other products could also increase.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Teva Pharmaceutical Industries Limited Stock Quote
Teva Pharmaceutical Industries Limited
$7.89 (4.92%) $0.37
Amgen Inc. Stock Quote
Amgen Inc.
$245.55 (0.93%) $2.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.