Teva posts strong revenue growth as branded drugs surpass $1 billion, despite acquisition-driven loss
Revenue beats expectations and outlook improves, even as the Emalex acquisition pushes the company to a quarterly loss.
Israeli pharmaceutical giant Teva reported solid second-quarter results, delivering better-than-expected revenue and raising its outlook for its key branded medicines, even as a major acquisition pushed the company to a quarterly operating loss.
Teva generated $4.1 billion in second-quarter revenue, slightly exceeding analysts' expectations. While adjusted earnings per share came in below consensus, the company's continued transition toward higher-margin branded medicines remained the standout feature of the quarter.
For the first time, Teva's portfolio of innovative medicines generated more than $1 billion in quarterly revenue, marking 43% year-over-year growth.
Its biggest growth driver, Austedo, which treats movement disorders, generated $696 million in quarterly revenue, up 40% from a year earlier. Migraine treatment Ajovy posted 56% growth to $244 million, while schizophrenia drug Uzedy, Teva's newest branded medicine, generated $77 million, up 43% year over year.
Reflecting the strong performance of its innovative portfolio, Teva raised its combined annual revenue forecast for these three drugs to $3.7 billion, representing expected annual growth of 17%.
The results reinforce CEO Richard Francis' strategy of transforming Teva from a generics-focused manufacturer into a growth company driven by innovative, internally developed medicines.
The quarter's profitability, however, was heavily affected by Teva's recently completed acquisition of Emalex Biosciences for approximately $700 million in cash.
Research and development expenses surged to $970 million, compared with $244 million in the same quarter last year, primarily because Teva recorded approximately $726 million in acquisition-related expenses associated with Emalex.
As a result, Teva reported an operating loss of $231 million, compared with an operating profit of $455 million a year earlier, while net income declined by approximately $576 million.
Excluding one-time items, most of them related to the Emalex acquisition, Teva reported adjusted earnings of $0.02 per share, below analysts' expectations of $0.11 per share.
Despite the acquisition-related impact on quarterly earnings, Teva reaffirmed its full-year 2026 guidance.
The company continues to expect annual revenue of $16.5 billion to $16.85 billion, adjusted operating income of $3.8 billion to $4.0 billion, including approximately $770 million in Emalex-related expenses, and adjusted earnings per share of $1.91 to $2.10. Free cash flow for the year is projected to reach $2.0 billion to $2.4 billion.
Alongside its earnings, Teva also announced a significant capital markets move, saying it will replace its American Depositary Shares (ADSs) with a direct listing of its ordinary shares on the New York Stock Exchange. The one-for-one exchange will take effect on September 14.
The company said the move is intended to broaden its investor base, improve its eligibility for inclusion in major equity indices, and optimize its cost of capital. Teva's listing and trading on the Tel Aviv Stock Exchange will remain unchanged.
