10-Q · April 29, 2026
Teva reported Q1 2026 revenues of $3.98 billion, exceeding estimates of $3.81 billion and reflecting a 2% increase year-over-year. EPS came in at $0.53, beating the consensus of $0.46, driven by improved gross profit…
Earnings analysis · 10-Q
TEVA earnings analysis
Filed July 29, 2026 · Our reading of the company's report
The latest report
Teva delivered $4.142B of Q2 revenue and expanded gross margin by 170 basis points YoY to 52.0%, with robust innovative-medicine growth and $622M of free cash flow. However, the approximately $700M Emalex asset…
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Teva delivered $4.142B of Q2 revenue and expanded gross margin by 170 basis points YoY to 52.0%, with robust innovative-medicine growth and $622M of free cash flow. However, the approximately $700M Emalex asset acquisition drove R&D expense to $970M and resulted in a $231M operating loss and negative $0.49 GAAP EPS, versus $0.24 a year earlier. U.S. generic erosion, elevated legal liabilities, and a sharp increase in short-term debt temper otherwise improving operating cash generation and innovation momentum.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $-0.49
What stood out
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Gross-margin expansion offsets modest sales decline
Q2 revenue was $4.142B, down 1% YoY from $4.176B but up 4% sequentially from $3.98B in Q1 2026. Gross margin expanded to 52.0% from 50.3% YoY and 49.5% sequentially, driven by favorable mix from AUSTEDO and AJOVY.
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Innovative medicines delivered strong growth
AUSTEDO U.S. revenue rose 37% YoY to $676M, AJOVY U.S. revenue increased 83% to $116M, and UZEDY U.S. revenue grew 43% to $77M. International AJOVY revenue increased 146% to $49M, while International AUSTEDO revenue rose to $20M from $3M.
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Cash generation strengthened materially
Operating cash flow increased to $411M from $227M YoY, and company-defined free cash flow rose to $622M from $476M. Capital investment was $104M, equal to 2.5% of quarterly revenue.
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Liquidity remained solid despite acquisition spending
Cash and cash equivalents increased $99M from year-end to $3.655B, while total debt declined $214M to $16.593B. Teva had no borrowings outstanding under its $1.8B revolving credit facility at June 30, 2026.
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Emalex adds late-stage neuroscience asset
Teva completed the Emalex acquisition for approximately $700M on June 10 and submitted an FDA NDA for ecopipam on June 18. The asset also carries potential milestone payments of up to $200M plus $125M to other third parties.
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Generic pipeline retains substantial launch optionality
The U.S. generic pipeline included 101 pending applications at June 30, including 59 tentative approvals; underlying branded products represented approximately $102B of U.S. sales. Teva believes it is first-to-file on 48 pending products.
What to watch
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Emalex charge drove GAAP loss and EPS reversal
GAAP operating income swung to a $231M loss from $455M income a year earlier, producing diluted GAAP EPS of negative $0.49 versus positive $0.24. R&D expense rose 298% to $970M, primarily from the Emalex acquired IPR&D charge.
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U.S. generics erosion remains a major headwind
U.S. generic and biosimilar revenue fell 31% YoY to $660M, principally due to lenalidomide competition; total U.S. prescriptions declined to approximately 237M from approximately 266M. U.S. segment result swung to a $76M loss from $699M profit.
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Litigation reserves and settlement cash needs increased
Legal-settlement and loss-contingency expense increased to $230M from $166M YoY, and the recorded legal provision rose to $4.854B at June 30 from $4.753B at year-end. Estimated opioid-settlement cash payments alone total $379M in 2026, of which $33M had been paid by June 30.
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Near-term refinancing concentration rose
Short-term debt increased to $4.500B from $1.820B at December 31, 2025, lifting the short-term portion of total debt to 27% from 11%. Although total debt declined to $16.593B, average maturity shortened to 5.1 years from 5.6 years.
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Geopolitical, supply-chain and FX exposure persists
MD&A warns that Iran-related disruptions to logistics corridors, shipping routes and air cargo hubs could delay production and distribution; management says the current impact was immaterial. Approximately 45% of Q2 revenue was denominated in currencies other than the U.S. dollar.
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No formal risk-factor update; API sale remains uncertain
Item 1A reports 0 material changes to risk factors previously disclosed in the 2025 Form 10-K. However, the filing continues to cite the proposed API-business divestiture, for which there is no assurance of timing, structure, or completion; API third-party sales declined 12% YoY to $118M.
Management's outlook
The 10-Q does not provide quantitative annual revenue, EPS, or free-cash-flow guidance; such outlook was provided separately in the earnings release. MD&A states Transformation programs are expected to reduce approximately 8% of the December 31, 2024 workforce by the end of 2027.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.