Teva raises 2025 EPS outlook and innovative product guidance as company targets $700M in cost savings by 2027

Earnings Call Insights: Teva Pharmaceutical Industries Limited (TEVA) Q2 2025

Management View

Richard D. Francis, CEO, emphasized Teva’s “10th consecutive quarter of growth” and highlighted that this growth is “driven by our innovative portfolio of AUSTEDO, UZEDY and AJOVY.” He noted, “AUSTEDO at just below $500 million, up 19%. UZEDY up 120% at $54 million and AJOVY, a very strong 31% at $155 million.” Francis stated, “We’ve increased the guidance here on AJOVY as well… up from $600 million to $630 million to $640 million.” He also confirmed the company is “well on track to deliver the savings that we committed to” under its transformation program.
Francis reported that Teva’s generics business declined 2%, but stated, “We predict will either be flat or low single-digit growth” for the full year. He described the TAPI segment’s 11% decline as “more of an anomaly and not indicative of TAPI’s normal results.”
Francis highlighted the pipeline, stating, “This pipeline will generate in peak sales over $10 billion of sales.”
On cost savings, Francis said, “We put together a modernization program, which will allow us to generate $700 million of net savings, and this is after the reinvestment in our innovative pipeline and our innovative portfolio.”
CFO Eliyahu Sharon Kalif stated, “Q2 came in with a solid performance driven by our fast-growing innovative portfolio despite tough year-over-year comparables of our generics business.” Kalif added, “We continue to improve and strengthen our balance sheet, more specifically, reduced our working capital days and leverage, which was recognized by the leading credit rating agencies.”

Outlook

Teva reaffirmed its full-year 2025 revenue guidance range of $16.8 billion to $17.2 billion, with Francis noting, “We will hit our mid or slightly below our midpoint of our revenue guidance.”
The company increased the lower end of its non-GAAP EPS guidance by $0.05 to a new range of $2.50 to $2.65.
Kalif stated, “We have increased our combined guidance for them [AUSTEDO, AJOVY and UZEDY] by approximately $100 million at the midpoint…with increased expectations of our combined 2025 revenue outlook for these 3 products, it’s around $2.9 billion versus $2.3 billion in 2024.”
Teva expects its non-GAAP gross margin for 2025 to be “between 53% to 54% for the full year” and believes it will be “above and at the midpoint of this range.”
Kalif reiterated, “We remain confident in and on track for achieving our 30% operating margin target by 2027.”

Financial Results

Teva reported Q2 revenue of approximately $4.2 billion, up 2% in U.S. dollars or 1% in local currency, excluding the Japan business.
GAAP net income and EPS were $282 million and $0.24, respectively.
Non-GAAP gross margin, excluding Japan, increased 130 basis points year-over-year to 54.6%.
Non-GAAP operating margin rose to 27.1%, benefiting from lower R&D expenses.
Non-GAAP EPS was $0.66, an increase of $0.05 or 10% year-over-year.
Free cash flow grew 47% to $476 million.
Gross debt was $17.2 billion at the end of Q2; net debt was $15.1 billion.

Q&A

Unidentified Analyst, Evercore ISI, asked about AUSTEDO IRA negotiation discount expectations and European tariffs. Francis responded, “We’re not going to comment on anything to do with the IRA because we are in the middle of negotiations with CMS.” On tariffs, Kalif explained, “More than 50% of the products that we’re selling in the U.S. is actually manufacturing in the U.S.”
Ashwani Verma, UBS, inquired about AUSTEDO XR conversion and tariff impacts. Francis said, “AUSTEDO XR will become the predominant drug that’s used. It just takes a bit of time.” Kalif reiterated, “We have absorbed the already confirmed tariff into our 2025, and currently…we don’t see any meaningful impact.”
Matthew Michael Dellatorre, Goldman Sachs, asked about duvakitug development and potential priority review for olanzapine LAI. Hughes replied, “For duvakitug, we’re working very closely with our partner, Sanofi…those studies will be starting right on time.” On olanzapine LAI, Hughes said, “We don’t anticipate having a priority review for that program.”
Jason Matthew Gerberry, Bank of America, questioned AUSTEDO revenue versus volume growth and China sourcing. Francis explained the timing of XR transition and Kalif stated, “There is almost nothing that we are actually bringing from China.”
David A. Amsellem, Piper Sandler, asked about generic Revlimid dynamics and UZEDY guidance conservatism. Francis said, “It’s multifactorial…we have other factors growing our generics business and other factors that allow us to have a confidence in giving a guidance to flat to low single digit.”

Sentiment Analysis

Analysts posed detailed questions on product guidance, margin sustainability, and tariff exposure, often seeking clarification on regulatory and macroeconomic risks. The tone was generally neutral, with some slightly positive inflections on strong product performance.
Management demonstrated confidence, repeatedly affirming guidance and cost savings targets. Francis used phrases such as “we remain committed and confident” and “we are confident in growing adjusted EBITDA.”
Compared to the previous quarter, both management and analysts maintained a consistent tone, with management continuing to project confidence and analysts focusing on execution risks and product performance.

Quarter-over-Quarter Comparison

The current quarter saw raised guidance for key innovative products and a higher EPS outlook, while the previous quarter increased the lower end of revenue and EPS guidance but did not raise product-specific targets as aggressively.
Strategic focus remains on the innovative portfolio, with more emphasis this quarter on the upcoming olanzapine launch and long-acting schizophrenia franchise.
Analysts continued to press for details on cost controls, tariff mitigation, and pace of product adoption, similar to last quarter.
Management’s confidence in delivering transformation cost savings and growth targets remained strong in both quarters.
The generics business discussion shifted slightly to acknowledge a 2% decline, but management reiterated its expectation for flat to low single-digit growth.

Risks and Concerns

Management highlighted continued ambiguity and lack of clarity regarding tariff impacts in both the U.S. and Europe, but stated existing mitigation plans are in place.
The TAPI decline was described as an anomaly related to seasonality and timing, not indicative of a trend.
Uncertainty remains around the IRA negotiation outcome for AUSTEDO.
Analysts raised concerns about potential softness in generics, timing of key product launches, and the sustainability of margin improvements.

Final Takeaway

Teva’s management reaffirmed confidence in achieving 2025 and 2027 financial targets, backed by robust growth from its innovative portfolio and significant cost savings initiatives. The company increased guidance for its key products, raised its EPS outlook, and highlighted a clear pathway to a 30% operating margin by 2027, while maintaining a strong balance sheet and actively managing regulatory and macroeconomic risks.

Read the full Earnings Call Transcript