As it was unveiling the details of its $40.5 billion acquisition of Allergan’s generic-drug business Monday, Teva Pharmaceuticals also reported second-quarter profit that beat analysts’ estimates and raised its full year 2015 outlook.
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In preliminary results, Teva said it earned $1.43 a diluted share excluding one-time items in the April-June quarter, 15% higher than a year earlier. A strong shekel caused revenue to slip 2% to $4.97 billion, but excluding the impact of foreign exchange fluctuations and the sale of over-the-counter factories in the United States a year ago, revenue was up 6%, the company said.
Teva was forecast to earn $1.31 a share in the second quarter on revenue of $4.91 billion, according to Thomson Reuters I/B/E/S. Teva will publish full results on Thursday.
Meanwhile, the company raised its 2015 earnings per share estimate to a range of $5.15 to $5.40, from a previous estimate of $5.05-$5.35.
The results “further demonstrate Teva’s continuous momentum and significantly strengthened fundamentals, improved generics and specialty businesses and ability to drive organic growth,” said CEO Erez Vigodman.
The 2015 forecast doesn’t take into account the Allergan acquisition, which won’t close before next year.
At a conference with analysts Monday, Vigodman said the combined companies would have pro-forma revenue of $26 billion and earnings before interest, tax, depreciation and amortization of $9.5 billion in 2016.
He forecast a double-digit boost to adjusted earnings per share in 2016, and a more than 20% benefit in years two and three after closing the deal. Teva said it expected cost synergies and tax savings of $1.4 billion annually by the third anniversary from efficiencies in operations, manufacturing, and sales and marketing.
Teva said it also expects the acquisition to generate free cash flow of $6.5 billion in 2016 and increased free cash flow in subsequent years. This means it will be able to pursue acquisitions to expand its portfolio in both specialty pharmaceuticals and generics.