Teva (TEVA) Q2 2026 Earnings Report

The call skewed positive: the company showed strong, broad-based growth in its innovative portfolio (AUSTEDO, AJOVY, UZEDY) with multiple guidance increases, substantial free cash flow improvement (+31% YoY), margin expansion (gross margin +80 bps) and progressing pipeline and biosimilars commercialization that together materially reshape the company’s revenue mix and long-term outlook. Near-term challenges include a Q/Q revenue decline driven by the loss of generic REVLIMID, sizable one-time MLX acquisition charges that compressed reported margins and EPS, elevated AUSTEDO channel inventory and planned higher OpEx to support launches. Management framed these negatives as transitional (one-time or sequencing effects) while emphasizing durable growth drivers and credit-rating upgrades. On balance, the positive items (strong product growth, guidance raises, cash flow, pipeline progress and biosimilars momentum) outweigh the short-term headwinds.

Management raised the midpoint of full‑year revenue guidance by $75 million and bumped product guidance for key innovators — AUSTEDO to $2.45–$2.60 billion (midpoint $2.5B, +$50M), UZEDY to $270–$290 million (+$15M) and AJOVY to $850–$870 million (+$90M) — bringing the three-product combined 2026 outlook to roughly $3.7 billion (≈17% growth vs. 2025). They reaffirmed ranges for operating profit, adjusted EBITDA, EPS and free cash flow, reiterated mid‑single digit revenue growth targets, a 30% non‑GAAP operating margin goal by 2027, and a net debt/EBITDA target below 2% (Q2 net debt $12.9B; net debt/EBITDA 2.8x, 2.3x ex‑MLX). 2026 non‑GAAP gross margin is guided to 54.5%–55.5% (Q2 was 55.4%, +80 bps Y/Y); OpEx is expected at ~28% of revenue; Q2 free cash flow was $622M (+31% Y/Y). They expect global generics flat to down low‑single digits ex‑generic REVLIMID, biosimilars on track to exceed $800M by 2027, and noted Q4 phasing assumptions (AUSTEDO Q4 YoY pressure related to IRA dynamics and inventory normalization; olanzapine initial Q4 volumes expected to be samples with no revenue).