Teva Pharmaceutical Industries Ltd. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenues were $4.4 billion, a 2% decrease year-over-year in both U.S. dollars and local currency.
• GAAP diluted EPS was $0.20, a 47% decrease year-over-year; non-GAAP diluted EPS was $0.86, a 10% increase year-over-year.
• GAAP operating income was $714 million; non-GAAP operating income was $1,393 million.
• GAAP gross profit margin was 55.5% compared to 51.4% in Q3 2025; non-GAAP gross profit margin was 58.7%, an increase of 345 basis points year-over-year.
• Cash flow from operating activities was $241 million; free cash flow was approximately $0.5 billion ($495 million).
• Total debt was $16,718 million as of September 30, 2026, down from $16,807 million as of December 31, 2025.
• Financial expenses, net were $414 million, primarily driven by a $224 million loss on extinguishment of debt.
• Adjusted EBITDA was $1.5 billion, a 7% increase year-over-year.

Guidance and Future Outlook:

• 2026 revenue outlook raised to $16.7–$17.0 billion from $16.5–$16.85 billion.
• 2026 non-GAAP operating income outlook raised to $3.8–$3.9 billion from $3.8–$4.0 billion.
• 2026 non-GAAP diluted EPS outlook raised to $1.92–$2.11 from $1.91–$2.11.
• 2026 free cash flow outlook raised to $2.1–$2.4 billion from $2.0–$2.4 billion.
• AUSTEDO 2026 revenue outlook raised to $2.55–$2.65 billion from $2.45–$2.60 billion.
• AJOVY 2026 revenue outlook raised to $930–$960 million from $850–$870 million.
• UZEDY 2026 revenue outlook raised to $290–$310 million from $270–$290 million.
• Teva targets a 30% non-GAAP operating income margin and approximately $700 million of net savings by 2027.
• The company aims to achieve two times debt leverage by the end of 2027.

Business Segments and Product Lines:

• Key innovative brands (AUSTEDO, AJOVY, UZEDY) generated approximately $1.1 billion in revenues, growing 33% year-over-year in local currency.
• AUSTEDO global revenues were $751 million, up 21% year-over-year in local currency.
• AJOVY global revenues were $269 million, up 61% year-over-year in local currency.
• UZEDY revenues were $85 million, up 96% year-over-year in local currency.
• WELTRUZA received FDA approval in October 2026 for the treatment of schizophrenia; the LAI schizophrenia portfolio (UZEDY and WELTRUZA) has a peak sales potential of $1.5–$2.0 billion.
• Global generics revenues decreased 16% year-over-year in local currency, primarily due to lower U.S. revenues from lenalidomide capsules.
• Biosimilars business is expected to exceed $0.8 billion in 2026 revenues, achieving the original 2027 objective one year early.
• The U.S. FDA accepted the New Drug Application for ecopipam for Tourette syndrome, with an action date expected in Q1 2027.
• Teva reported positive Phase 2a results for anti-IL-15 (TEV-408) in Celiac disease and plans to begin Phase 2b in vitiligo in Q4 2026.
• Teva discontinued its Phase 2 Multiple System Atrophy (MSA) study of emrusolmin following an interim futility analysis.
• United States segment revenues were $1.87 billion, a decrease of 11% year-over-year.
• Europe segment revenues were $1.32 billion, an increase of 7% year-over-year.
• International Markets segment revenues were $592 million, an increase of 6% year-over-year.

Market and Competitive Landscape:

• Increased competition for lenalidomide capsules (a generic version of Revlimid) in the U.S. drove lower generics revenues.
• Teva's total U.S. generic prescriptions were approximately 227 million (5.8% market share) in Q3 2026, down from 261 million (6.7% market share) in Q3 2025.
• AJOVY's exit market share in the U.S. subcutaneous injectable anti-CGRP class was 32.8% in Q3 2026, compared to 32.2% in Q3 2025.
• COPAXONE revenues in Europe decreased 12% due to price reductions and lower volumes from alternative therapies.
• A strategic partnership was announced in April 2026 for the marketing and distribution of AJOVY in China with Nuerogen (Zhuhai) Pharmaceutical Company Ltd.

Risks and Challenges:

• Sustained conflict between Russia and Ukraine is ongoing; a shared warehouse in Ukraine was damaged in September 2026, though operations resumed and the impact was immaterial.
• The company faces risks related to generic competition, regulatory policy changes, and the effectiveness of patents.
• Significant indebtedness may limit the ability to incur additional indebtedness or engage in transactions.
• Legal settlements and loss contingencies, including antitrust and opioid litigation, remain a factor.
• The company is conducting a sales process for the divestiture of its API business, with no assurance regarding timing or completion.
• Most-Favored-Nation (MFN) agreement with the U.S. Administration includes prospective pricing commitments for future innovative product launches.

Management Commentary and Tone:

• Richard Francis, President and CEO, stated that the strong third-quarter performance demonstrates the "Pivot to Growth" strategy in action.
• Management expressed confidence in raising 2026 revenue outlooks for AUSTEDO, AJOVY, and UZEDY due to sustained innovative growth and margin expansion.
• The return to investment grade credit rating and debt refinancing reflect the transformation of the company's financial position.
• Management highlighted the ambition to deliver at least five potential innovative launches over five years.

Other Key Points:

• Moody's and S&P upgraded Teva to investment grade during Q3 2026, following Fitch's earlier upgrade.
• Teva refinanced approximately $4.9 billion in debt during Q3 2026, including an early redemption of $4.678 billion in senior notes and issuance of $4.837 billion in new senior notes.
• Teva directly listed its ordinary shares on the New York Stock Exchange (NYSE).
• Teva acquired BXCL-501 from BioXcel Therapeutics Inc., which is under FDA review for the acute treatment of agitation associated with schizophrenia or bipolar I or II disorder.
• Teva deepened collaboration with Samsung Bioepis for the commercialization of two additional biosimilars: infliximab-abda (Remicade biosimilar) and etanercept-ykro (Enbrel biosimilar).
• Teva received a $500 million development milestone payment for duvakitug (anti-TL1A) in Q4 2025, which was excluded from non-GAAP gross profit margin calculations for Q3 2026.
• Anda, Teva's distribution business, was reclassified from the United States segment to Other Activities commencing January 1, 2026.