Teva Pharmaceutical Industries Ltd (ADR)(NYSE: TEVA) stock lost over 14.9% on November 2nd, 2017 (as of 11:36AM EDT; Source: Google finance) due to lower than expected third quarter results and outlook.
The group’s GAAP gross profit fell 6% yoy to $2.6 billion during the third quarter of 2017, hurting GAAP gross profit margin which fell to 47.1% from 50.4% in the pcp. Non-GAAP gross profit lost 12% yoy to $3.0 billion during the third quarter of 2017, resulting to a week Non-GAAP gross profit margin of 53.0% during the third quarter of 2017, from 61.0% in pcp. Weak performance of the group’s generic medicines, as well as their specialty medicines businesses, hurt the performance. Moreover, the addition of the low-margin Anda distribution business also led the weakness. The group’s Revenues rose 1% yoy to $5.6 billion, during the third quarter of 2017.
The group also cut their FY17 outlook, and currently, expects Revenues in the range of $22.2-22.3 billion for FY17 as compared to their earlier forecasts of $22.8-23.2 billion. Non-GAAP EPS is currently forecasted to reach in the range of $3.77- $3.87 from earlier estimates of $4.30-4.50. The earlier than expected, at-risk launch of a generic competitor to Copaxone® 40 mg/mL, is forecasted to hurt the EPS by over 30 cents.
Moreover, the new generic launches in the U.S contribution also hurt the forecasts wherein the group expects only $400 million of revenues from new product launches in the year, against their earlier projection of $500 million. Rising price erosion and volume declines in their U.S. Generics business including rising competition to their largest product, the Concerta® authorized generic would hurt the group’s business.
During the third quarter of 2017, the group’s Generic medicines revenues fell 8% yoy to $3.0 billion, against pcp. Generic segment’s U.S. revenues fell 9% yoy to $1.2 billion, hurt by falling prices leading to customer consolidation into larger buying groups and accelerated FDA approvals for additional generic versions of competing for off-patent medicines. But the European revenues rose 6% yoy to $985 million, driven by the inclusion of three months of Actavis Generics revenues, against only two months in the third quarter of 2016.