Business is deteriorating for Teva Pharmaceuticals (NYSE: TEVA). The company reported Q4 revenue falling 15.9%, with Copaxone sales falling a dramatic 19.1%. The sharply lower guidance also disappointed investors, leading to a selloff in the stock on earnings day (Feb. 8).
Outlook
Teva guided revenue falling 17% from last year, or $18.3 billion - $18.8 billion. Non-GAAP EPS will be in the range of $2.25 - $2.50 for 2018. Mylan’s (MYL) entry into Teva’s Copax market weighed on resulted earlier than management expected. Generic falling 16% also hurt results.
Still, the overall results are negative because of a goodwill write-down. In the current quarter, CEO Kåre Schultz will lead the company anew: cost cutting measures will not show up in results until the latter part of 2018 and the first-half of 2019.
Takeaway
Teva’s buyout of Allergan’s (NYSE: AGN) is proving expensive. The management and CEO at the time, along with the board, approved the deal. Now, in the post-slowdown phase of biotech, falling sales and drug pricing pressure will limit Teva’s upside.
There is hope. Teva is targeting its debt, which will lower interest expenses. More goodwill will be written off next year but the bulk of it was done already.
