Teva (TEVA) Acquires NuPathe (PATH) for $144 Million

NEW YORK (TheStreet) -- Teva  (TEVA) announced Tuesday that it will acquire NuPathe  (PATH) for $144 million.

NuPathe fell 7.5% to $4.05 and Teva gained 2.3% to $45.29 on the news.

The deal will see Teva pay $3.65 in cash for each share of NuPathe. NuPathe shareholders can also receive cash payments of up to $3.15 per share if certain net sales of NuPathe's ZECUITY migraine treatment are met over time.

As part of the deal shareholders will receive $2.15 per share in cash after net sales of ZECUITY reach at least $100 million in any four consecutive calendar quarters. The other $1 per share will be paid when net sales of the migraine treatment reach at least $300 million in any four consecutive calendar quarters. Both payment agreements are only active until "the 60th day following the ninth anniversary of the date of the first commercial sale of ZECUITY."

Due to acquisition by Teva, NuPathe has ended its agreement and plan to merge with Endo Health Solutions (ENDP).

TheStreet Ratings team rates Teva as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TEVA PHARMACEUTICALS (TEVA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TEVA's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 1.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 1000.0% when compared to the same quarter one year prior, rising from -$79.00 million to $711.00 million.
  • The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that TEVA's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Pharmaceuticals industry and the overall market, TEVA PHARMACEUTICALS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has significantly decreased to $444.00 million or 57.63% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: TEVA Ratings Report

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