TEVA earnings analysis
What we found in TEVA's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.49
- Gross margin
- 52.0%
- Operating margin
- -5.6%
- Segment
- United States: $1.702B, down 5% YoY from $1.786B; segment loss of $76M versus $699M profit.
- Segment
- Europe: $1.263B, down 3% YoY from $1.298B; segment profit rose 1% to $367M.
- Segment
- International Markets: $550M, up 11% YoY; segment profit rose 34% to $99M.
- Segment
- Other Activities: $627M, up 5% YoY; Anda revenue was $413M, up 13%, while third-party API sales were $118M, down 12%.
What they said about what is next.
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.
The filing reads about the same as the one before it.
What came before.
- 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…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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