Teva Pharmaceutical Industries (TEVA) Q1 2026 earnings summary

Executive summary

• Q1 2026 delivered solid results with revenues of $4.0 billion, up 2% year-over-year in USD, driven by strong growth in the innovative portfolio (AUSTEDO, UZEDY, AJOVY), offsetting declines in generics and the Japan divestment.

• Adjusted EBITDA was $1.1 billion (+2% YoY); non-GAAP EPS was $0.53 (+2% YoY); net income rose to $369 million from $214 million.

• Free cash flow increased 76% to $188 million, reflecting improved operating cash flow and asset sales.

• The acquisition of Amylyx/Emalex for $700 million upfront plus up to $200 million in milestones accelerates the shift toward innovative, high-margin products and strengthens the neuroscience pipeline.

• The company remains committed to its 2027 financial targets, including a 30% operating margin and net debt to EBITDA below 2x.

Financial highlights

• Q1 2026 revenue was $4 billion, down 1% year-over-year, but up 7% excluding Japan divestment and generic Revlimid; GAAP revenues were $3,982 million (+2% YoY).

• Non-GAAP gross margin reached 52.9%, driven by innovative products and favorable generics mix; GAAP gross margin was 49.5%.

• Adjusted EBITDA rose 2% to $1.1 billion; non-GAAP operating income was $956 million (24.0% margin); GAAP operating income was $652 million (16.4% margin).

• Free cash flow was $188 million, up from $107 million last year; net debt reduced to $16.6 billion as of March 31, 2026.

• Non-GAAP EPS increased 2% to $0.53; diluted GAAP EPS was $0.31.

Outlook and guidance

• 2026 revenue guidance maintained at $16.4–$16.8 billion; AUSTEDO $2.4–$2.55 billion, AJOVY $750–$790 million, UZEDY $250–$280 million.

• Non-GAAP operating income expected at $3.8–$4.0 billion (impacted by $700 million IPR&D charge and $75 million Emalex expenses); adjusted EBITDA $4.23–$5.3 billion.

• Free cash flow guidance remains $2.0–$2.4 billion; effective tax rate outlook unchanged at 16%–19%.

• Operating expenses expected at the higher end of 27%–28% of revenue due to Amylyx/Emalex transaction costs.

• 2027 targets reiterated: mid-single digit revenue growth, 30% non-GAAP operating margin, net debt/EBITDA <2x, and 80% cash-to-earnings.