On Monday, September 11, after Teva Pharmaceutical announced that it had officially filled its open CEO seat, shares of the pharmaceutical company increased 18%.
What Happened?
The Israel-based company disclosed today that it has hired Kare Schultz as its new president and CEO. It’s not a total surprise Teva’s (NYSE:$TEVA) stock soared after the news, as Schultz is an industry veteran with more than 30 years of experience. For perspective, Schultz has held leading positions at pharmaceutical companies like Lundbeck (CPH:$LUN) and Novo Nordisk (CPH:$NOVO-B).
After Schultz’s family relocates to Israel, he will be taking over from Teva’s current interim CEO, Dr. Yitzhak Peterburg.
Here’s what Dr. Sol Barer, the chairman of Teva Pharmaceutical’s board, had to say about the hiring of Schultz:
“With extensive global pharmaceutical experience, a strong track record executing corporate turnaround strategies, driving growth and international expansion at low incremental cost and delivering on promises to shareholders, as well as a commitment to a culture of compliance, Kare is the right leader to take Teva to the next level.”
What Does the Future Entail?
Before Peterburg officially stepped aside, he said the following to investors:
“We are delivering on the commitments we have made over the last several months. We are optimizing our operations and geographical footprint while focusing our resources on the specialty and generics pipeline assets that offer the most attractive return on investment. In addition, we are on course to hit our target of generating at least $2 billion from the sale of non-core assets, which we will use to strengthen Teva’s balance sheet.”
This might sound fantastic, but Schultz still has one heck of a challenge in front of him. Why? Because Schultz will have to get Teva back on track, but during its last earnings report, the company reported declining specialty revenue, as well as a massive drop in margins, and decreasing profitability. As a result, Teva Pharmaceuticals was forced to cut its guidance and cut its dividend by 75% in an attempt to preserve cash.
The Takeaway
Combining the above mentioned information with Teva Pharmaceuticals massive debt load gives an investor a clear indication that they should keep as far away from this troubled company as possible.
Featured Image: twitter
