Page Quote News Graphs Company Profile Recommendations
More articles on the subject:
Yesterday it beat analysts’ earnings forecasts for the fourth quarter, but missed revenue, and the forward forecast was disappointing. In a conversation with the market, CEO Carr Schultz said that 2021 was not the “transition period” as they thought, but in his opinion the delay will be only a year, when in 2022 they want to leave the opioid affair that casts a shadow on them already behind. Schultz and CFO Eli Khalif They said that they had updated the provision for the provision, so that they now covered the amount that two years ago they estimated it would collect from them. Calif tells in an interview with BizPortalWhich we brought in yesterday during trading, because Teva drew optimism from other arrangements, with them and the other defendants in the case, and therefore the assessment remained the same – and this also instilled optimism among investors, who jumped the stock by 8.5% last night on Wall Street.
“Today I am more optimistic than I was a year or two ago,” shares Calif.
JOHNSON & JOHNSON
Page Quote News Graphs Company Profile Recommendations
More articles on the subject:
(JNJ) won it. “The settlement we reached with the prosecutor in Louisiana is a kind of reflection of how we see things, and it is reflected even more now in the settlement with Texas – $ 150 in cash compensation over 15 years and another $ 75 million drug donation track over ten years.” .
Recall that in the opioid case, Teva was sued alongside other painkiller distributors by US states, for wholesale registration of prescriptions for patients, so according to the picture that emerges from the lawsuit, without sufficient warning of the danger of addiction that has become a real epidemic in the United States. The appeal to which Caliph refers was obtained in a case in which Teva, Johnson & Johnson, Endo and Allergen of Activists were sued for $ 50 billion. The court there ruled that it had not been proven that doctors who provided prescriptions for these painkillers did not do so for purely medical reasons.
Caliph mentioned Louisiana – where the permanent arrangement would pay $ 15 million over 18 years, along with a $ 3 million supply of unpaid drugs. So 18 years in Louisiana, 15 years in Texas as he said. These numbers are important, as in the framework agreement from 2019 the discussions revolved around a component of a cash fine of a quarter of a billion dollars, to be paid in just ten years. For a company that has a net debt of NIS 21 billion and has generated a cash flow of only $ 2-2.2 billion in recent years, the retirement of payments is critical, as Calif will explain:
“In the first half of 2020, we actually began to see that the three drug distributors claimed in the case and Johnson & Johnson were required to increase their cash share in the arrangements, and an opening was created to increase the duration of payment, from 10 years to 18 years (almost double – AP) .It actually made us realize that we need to both explore the possibility of paying more and also stick to our strategy that reflects a drug contribution.
“It also made us update our ‘best estimate’ on the provision in the financial statements, from about $ 1.5 billion to the $ 600 million I mentioned in the investors’ call. We already have a provision of $ 920 million we made in the second and third quarters of 2019, the update made this quarter “It is in the amount of $ 600 million. In total, in the financial statements there is a provision as of the end of the year of $ 1.5 billion.”
The picture will reflect to us, in another legal sector, the alleged price coordination affair in Generica, you reached a $ 420 million settlement in Connecticut – you have already made the provision, and you have reassured the investors that most of the amount will be covered by the insurance. In the opioid case there is no such “card” of insurance coverage. Right?
“In the generics case, the class actions concern the personal responsibility of directors in the company, and for that we have indemnity from the insurance – 90% of the amount is covered by him. The opioid case as you said is not related to insurance indemnity. “In each sub-district anew. Our estimate of the provision in the case, $ 1.5 billion as stated, pertains to such a comprehensive arrangement.”
The 2019 framework agreement also included the provision of $ 25 billion in drugs – what about that? Is this reflected in the provision, or will the compensation in the form of medicines harm your free flow?
“The $ 1.5 billion takes that amount into account. It should be explained that $ 25 billion is a number that reflects the price to the consumer, it costs us less of course to produce them, and the cost of production after capitalization, ie in today’s money terms – net current value (NPV) “It is included in the amount we set aside. Since the cash payment will be spread over 15-18 years, it will not harm our liquidity.”
That is, the cash flow will not go to arrangements and will be able to serve the entire debt. And yet, despite raising $ 5 billion in environmental bonds at the end of 2021 and extending the debt maturity, one has to ask if you did not wake up too late and have to raise more debt before the interest rate environment changes?
“The environmental bonds were in fact refinancing – we raised them at the same time as repaying another debt, money came out and money went into the company that day. Our strategy is to raise debt when we have three years of current liabilities that allow us to see liquidity ahead. We will return to the market somewhere in the second half of 2023 and raise $ 3-4 billion in refinancing, for the 2025-2027 expiration dates.
“Since we are a company with High Yields bonds, double digit yields on debt – AP) with about $ 1 billion in interest expenses, we do not want to ‘lock’ ourselves into raising debt beyond 3 years because you “I do not know how the market will behave in terms of interest rates. If we raise another 3 years, when the debt-to-EBITDA ratio improves, we will be able to raise debt cheaper. The strategy is to refinance year-on-year.”
Let’s talk about the Ostedo. You wanted to sell $ 330 million of it within a quarter, as compensation for the rate in the previous three, and you left that target because you thought it was feasible. In the end it did not happen and you missed the target by $ 42 million. So why did it not actually happen, and does the reason for it continue to haunt you for the next few quarters?
“We said we would sell $ 850 million from it and sell for $ 808 million, and it should be noted that $ 802 million of that amount was in the United States alone – it was not far from the target, certainly not in such a drug. Between a patient and a doctor who will diagnose him, and also make sure that the patient continues to take the drug and does not abandon the treatment.
“What is hampering osteo sales is the corona, and the virus still has important implications. We do not control it, and yet you will agree with me that a quarterly increase in drug sales, from $ 200 million to $ 282 million, is significant. We welcome the increase. this”.
You talked about continuing to optimize the supply chain – we saw that operating profit fell 9% while revenues fell less, by 8%. So in what places was the savings, and in what form?
“The efficiency in absolute dollar terms is recognizable. It is measured by the direct costs of production of material (COG – Cost of Goods – AP) and operating expenses (OPEX – Operating Expenses – AP). We reduced the cost from $ 12.3 billion to $ 11.5 billion – this is a gap of $ 800 million. 60% of this decrease, which is about $ 480 million, is related solely to efficiencies such as the sale of factories and efficiencies in production. The remaining 40% is related to a decrease in sales volume AP) in terms of variable expenses.
“The move we made is very significant and whoever looks will see it in the gross profit margin, both in the fourth quarter of 2021 and in the whole year. From a gross profit margin of 51.5% in 2019 we grew to 54.2% in 2021, an improvement of almost 3 percentage points (300 basis points “AP) in two years is a pretty respectable achievement by all accounts, especially in our world.”
Mixed results for the quarter
In the last quarter of 2021, Teva posted a non-GAAP earnings of $ 0.77 per share ($ 854 million in total) on revenue of $ 4.1 billion. The market expected a non-GAAP earnings of $ 0.73 per share on revenue of $ 4.29 billion. Over the corresponding quarter in 2020, this is an 8% decrease in revenue and a 13% increase in the earnings per share line. At the end of the period, Teva’s debt was $ 23.043 billion, compared to $ 25.919 billion at the end of 2020.
The forecast for 2022 is for revenue of $ 15.6-16.2 billion – the mid-range is $ 15.9 billion, below analysts’ forecast of $ 16.2 billion. The expected earnings of $ 2.4-2.6 per share (mid-range $ 2.5) are also below analysts’ forecast of earnings of $ 2.62 per share.
The company also expects free cash flow in 2022 of $ 1.9-2.2 billion and an estimated operating profit of $ 4.2-4.5 billion – worse than in 2021. Nerve disorder) and $ 400 million from Ajobi against migraine.