Shares of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) dropped over 20 percent on Thursday after the company reported second quarter earnings that missed estimates for both EPS and revenue.
Teva posted earnings per share of $1.02, compared to $1.06 per share that analysts expected on average. Revenue also fell short of analysts’ outlook by $300 million, coming in at $5.656 billion versus the expected $5.178 billion.
The pharmaceutical company, based in Petach Tikva, Israel, is the world’s largest producer of generic medicines. In specialty medicines, Teva has treatment for multiple sclerosis as well as late-stage development programs for other disorders of the central nervous system.
Former CEO, Erez Vigodman, resigned on February 7 after reports of a bribery investigation by police in Israel. The company allegedly paid hundreds of millions in bribes and falsified documents to hide the fact.
The stock fell to a two decade low and has continued to decline more than 50 percent in the last year. Teva slashed its dividend by 75 percent from the last quarter to 8.5 cents per share. According to Bloomberg, EPS for the year will probably range from $4.30 a share to $4.50, the company said in a statement on Thursday. The sales forecast was cut to as low as $22.8 billion, amid an acceleration in erosion of prices and delays in approval for cheap copycat medicines in the U.S., its largest market. In January, Teva had lowered the profit outlook to $4.90 to $5.30 this year, with sales ranging from $23.8 billion to $24.5 billion.
Yitzhak Peterburg, the corporation’s interim CEO, blamed the poor performance on a saturation of the U.S. generic drug market. "[Teva] experienced … greater competition as a result of an increase in generic drug approvals by the U.S. FDA," Peterburg said in the earnings release. He added that "customer consolidation" hurt sales in the U.S., before saying competition hurt new product launches, some of which were delayed in the recent quarter.
The worsening outlook adds to the challenges that await a new chief executive, who will be tasked with containing the fallout of last year’s ill-timed $40.5 billion acquisition of Allergan’s knockoff-drugs division. That gamble failed to pay off as generic drugmakers began seeing their profit margins squeezed due to a drop in prices and left the company saddled with debt.