Teva signals return to fundraising after decade-long crisis
Teva signals return to fundraising after decade-long crisis
Israeli pharmaceutical giant eyes stock offering as part of its recovery plan.
After a series of achievements and positive news following a decade of crises, Teva is signaling that it may soon return to raising capital and debt. The Israeli pharmaceutical company filed a shelf prospectus with the U.S. Securities and Exchange Commission (SEC) over the weekend for a stock offering, without specifying dates or amounts.
A shelf prospectus allows companies to raise capital or debt over time, serving more as a statement of intent rather than an immediate fundraising action. In Teva’s case, this is an important development, as the company has emphasized in recent years that there were no plans to raise funds. This caution stemmed from the enormous $35 billion in debt that Teva incurred in 2015 to finance the failed $40 billion acquisition of Actavis. While the company has repaid about two-thirds of this debt over the past decade, it still owes $14.5 billion.
Following the acquisition’s failure and the resulting debt, Teva’s stock plummeted and remained stagnant for a long period. As a result, the company assured shareholders that it would not issue new shares during the crisis. In the past, Teva frequently raised funds, primarily to finance a series of acquisitions between the late 1990s and the Actavis debacle.
Teva now needs cash to meet upcoming repayment obligations while simultaneously focusing on growth, which is currently reducing profitability and cash flow. Since the arrival of CEO Richard Francis, the company has been shifting its focus from cutbacks and operational efficiency to growth. This shift is already reflected in a slight improvement in business performance, an increase in credit ratings, and excellent results from a major clinical trial of a drug for treating intestinal diseases. These factors have contributed to an 80% jump in Teva’s stock in 2024, bringing its current market value to around $20 billion.
For the current year, Teva expects revenue to range between $16.8 billion and $17 billion, reflecting a single-digit growth rate. Net profit is expected to be between $2.35 and $2.69 per share.
