Teva Pharmaceutical Industries : Immediate Report

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	WASHINGTON, D.C. 20549

FORM 10-Q

• QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the quarterly period ended March 31, 2024

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

	Commission file number 001-16174
	TEVA PHARMACEUTICAL INDUSTRIES LIMITED

(Exact name of registrant as specified in its charter)

Israel				Not Applicable
(State or other jurisdiction of				(IRS Employer
incorporation or organization)				Identification Number)
124 Dvora HaNevi'a St., Tel Aviv, ISRAEL			6944020
(Address of principal executive offices)				(Zip code)
				[phone]
		(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
	Trading		Name of each exchange
Title of each class
Symbol(s)		on which registered
American Depositary Shares, each representing			TEVA		New York Stock Exchange
one Ordinary Share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

	☒		☐
Large accelerated filer	Accelerated filer
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐No ☒

As of March 31, 2024, the registrant had 1,132,640,597 ordinary shares outstanding.

For an accessible version of this Quarterly Report on Form 10-Q, please visit www.tevapharm.com

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

INDEX

PART I.	Financial Statements (unaudited)
Item 1.	Financial Statements (unaudited)	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income (loss)	6
	Consolidated Statements of Comprehensive Income (loss)	7
	Consolidated statements of changes in equity	8
	Consolidated Statements of Cash Flows	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	66
Item 4.	Controls and Procedures	66

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	70
	Signatures	71
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TEVA PHARMACEUTICAL INDUSTRIES LIMITED

INTRODUCTION AND USE OF CERTAIN TERMS

Unless otherwise indicated, all references to the "Company," "we," "our" and "Teva" refer to Teva Pharmaceutical Industries Limited and its subsidiaries, and references to "revenues" refer to net revenues. References to "U.S. dollars," "dollars," "U.S. $" and "$" are to the lawful currency of the United States of America, and references to "NIS" are to new Israeli shekels. References to "ADS(s)" are to Teva's American Depositary Share(s). References to "MS" are to multiple sclerosis. Market data, including both sales and share data, is based on information provided by IQVIA, a provider of market research to the pharmaceutical industry ("IQVIA"), unless otherwise stated. References to "R&D" are to Research and Development, references to "IPR&D" are to in-process R&D, references to "S&M" are to Selling and Marketing and references to "G&A" are to General and Administrative. Some amounts in this report may not add up due to rounding. All percentages have been calculated using unrounded amounts. This report on Form 10-Q contains many of the trademarks and trade names used by Teva in the United States and internationally to distinguish its products and services. Any third-party trademarks mentioned in this report are the property of their respective owners.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report on Form 10-Q, and the reports and documents incorporated by reference in this Quarterly Report on Form 10-Q, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management's current beliefs and expectations and are subject to substantial risks and uncertainties, both known and unknown, that could cause our future results, performance or achievements to differ significantly from that expressed or implied by such forward-looking statements. You can identify these forward-looking statements by the use of words such as "should," "expect," "anticipate," "estimate," "target," "may," "project," "guidance," "intend," "plan," "believe" and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. Important factors that could cause or contribute to such differences include risks relating to:

• our ability to successfully compete in the marketplace, including: that we are substantially dependent on our generic products; concentration of our customer base and commercial alliances among our customers; delays in launches of new generic products; our ability to develop and commercialize biopharmaceutical products; competition for our innovative medicines; our ability to achieve expected results from investments in our product pipeline; our ability to develop and commercialize additional pharmaceutical products; our ability to successfully execute our Pivot to Growth strategy, including to expand our innovative and biosimilar medicines pipeline and profitably commercialize the innovative medicines and biosimilar portfolio, whether organically or through business development, and to sustain and focus our portfolio of generics medicines; and the effectiveness of our patents and other measures to protect our intellectual property rights, including any potential challenges to our Orange Book patent listings in the U.S.;

• our substantial indebtedness, which may limit our ability to incur additional indebtedness, engage in additional transactions or make new investments, may result in a future downgrade of our credit ratings; and our inability to raise debt or borrow funds in amounts or on terms that are favorable to us;

• our business and operations in general, including: the impact of global economic conditions and other macroeconomic developments and the governmental and societal responses thereto; the widespread outbreak of an illness or any other communicable disease, or any other public health crisis; effectiveness of our optimization efforts; our ability to attract, hire, integrate and retain highly skilled personnel; interruptions in our supply chain or problems with internal or third party manufacturing; disruptions of information technology systems; breaches of our data security challenges associated with conducting business globally, including political or economic instability, major hostilities or terrorism, such as the ongoing conflict between Russia and Ukraine and the state of war declared in Israel; costs and delays resulting from the extensive pharmaceutical regulation to which we are subject; our ability to successfully bid for suitable acquisition targets or licensing opportunities, or to consummate and integrate acquisitions; and our prospects and opportunities for growth if we sell assets or business units and close or divest plants and facilities, as well as our ability to successfully and cost-effectively consummate such sales and divestitures, including our planned divestiture of our API business;

• compliance, regulatory and litigation matters, including: failure to comply with complex legal and regulatory environments; the effects of governmental and civil proceedings and litigation which we are, or in the future become, party to; the effects of reforms in healthcare regulation and reductions in pharmaceutical pricing, reimbursement and coverage; increased legal and regulatory action in connection with public concern over the abuse of opioid medications; our ability to timely make payments required under our nationwide opioids settlement agreement and provide our generic version of Narcan® (naloxone hydrochloride nasal spray) in the amounts and at the times required under the terms of such agreement; scrutiny from competition and pricing authorities around the world, including our ability to comply with and operate under our deferred prosecution agreement ("DPA") with the U.S. Department of Justice ("DOJ"); potential liability for intellectual property right infringement; product liability claims; failure to comply with complex Medicare, Medicaid and other governmental programs reporting and payment obligations; compliance with anti-corruption, sanctions and trade control laws; environmental risks; and the impact of sustainability issues;

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TEVA PHARMACEUTICAL INDUSTRIES LIMITED

• the impact of the state of war declared in Israel and the military activity in the region, including the risk of disruptions to our operations and facilities, such as our manufacturing and R&D facilities, located in Israel, the impact of our employees who are military reservists being called to active military duty, and the impact of the war on the economic, social and political stability of Israel;

• other financial and economic risks, including: our exposure to currency fluctuations and restrictions as well as credit risks; potential impairments of our long-lived assets; the impact of geopolitical conflicts including the state of war declared in Israel and the conflict between Russia and Ukraine; potential significant increases in tax liabilities; the effect on our overall effective tax rate of the termination or expiration of governmental programs or tax benefits, or of a change in our business; and our ability to remediate an existing material weakness in our internal control over financial reporting;

and other factors discussed in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, including in the sections captioned "Risk Factors." Forward-looking statements speak only as of the date on which they are made, and we assume no obligation to update or revise any forward-looking statements or other information contained herein, whether as a result of new information, future events or otherwise. You are cautioned not to put undue reliance on these forward-looking statements.

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PART I - FINANCIAL INFORMATION

	FINANCIAL STATEMENTS
ITEM 1.
	TEVA PHARMACEUTICAL INDUSTRIES LIMITED
	CONSOLIDATED BALANCE SHEETS
	(U.S. dollars in millions, except for share data)
	(Unaudited)
		March 31,	December 31,
				2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	2,991		$	3,226
Accounts receivables, net of allowance for credit losses of $98 million and $95 million as of March 31, 2024 and
December 31, 2023, respectively			3,456			3,408
Inventories				3,949			4,021
Prepaid expenses			1,336			1,255
Other current assets			495			504
Assets held for sale			70			70
Total current assets			12,297			12,485
Deferred income taxes			1,960			1,812
Other non-current assets			470			470
Property, plant and equipment, net			5,618			5,750
Operating lease right-of-use assets, net			364			397
Identifiable intangible assets, net			5,056			5,387
Goodwill				17,007			17,177
Total assets
	$	42,773		$	43,479
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	3,060		$	1,672
Sales reserves and allowances			3,594			3,535
Accounts payables			2,439			2,602
Employee-related obligations			492			611
Accrued expenses			2,784			2,771
Other current liabilities			1,161			1,044
Liabilities held for sale			262			13
Total current liabilities
		13,792			12,247
Long-term liabilities:
Deferred income taxes			569			606
Other taxes and long-term liabilities			3,991			4,019
Senior notes and loans			16,584			18,161
Operating lease liabilities			294			320
Total long-term liabilities
		21,438			23,106
Commitments and contingencies, see note 10
Total liabilities			35,230			35,353
Equity:
Teva shareholders' equity:
Ordinary shares of NIS 0.10 par value per share; March 31, 2024 and December 31, 2023: authorized 2,495 million shares;
issued 1,238 million shares and 1,227 million shares, respectively.			58			57
Additional paid-in capital			27,796			27,807
Accumulated deficit			(13,673)		(13,534)
Accumulated other comprehensive loss			(2,775)		(2,697)
Treasury shares as of March 31, 2024 and December 31, 2023: 106 million ordinary shares			(4,128)		(4,128)
				7,278			7,506
Non-controlling interests			265			620
Total equity
			7,543			8,126
Total liabilities and equity	$	42,773		$	43,479

Amounts may not add up due to rounding.

The accompanying notes are an integral part of the financial statements.

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TEVA PHARMACEUTICAL INDUSTRIES LIMITED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (U.S. dollars in millions, except share and per share data)

(Unaudited)

			Three months
			ended
			March 31,
			2024		2023
Net revenues	$3,819	$3,661
Cost of sales	2,048		2,079
Gross profit	1,771		1,582
Research and development expenses	242	234
Selling and marketing expenses	608	546
General and administrative expenses	278	296
Intangible assets impairments	80	178
Other assets impairments, restructuring and other items	673	110
Legal settlements and loss contingencies	106	233
Other loss (income)	1	(2)
Operating income (loss)	(218)	(13)
Financial expenses, net	250	260
Income (loss) before income taxes	(467)	(272)
Income taxes (benefit)	(52)	(19)
Share in (profits) losses of associated companies, net	4		§
Net income (loss)	(419)	(253)
Net income (loss) attributable to non-controlling interests	(280)	(33)
Net income (loss) attributable to Teva	(139)	(220)
Earnings (loss) per share attributable to ordinary shareholders:
	Basic	$ (0.12)	$ (0.20)
	Diluted	$ (0.12)	$ (0.20)
Weighted average number of shares (in millions):
	Basic	1,123		1,115
	Diluted	1,123	1,115
§	Represents an amount less than $0.5 million.

Amounts may not add up due to rounding.

The accompanying notes are an integral part of the financial statements.

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TEVA PHARMACEUTICAL INDUSTRIES LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(U.S. dollars in millions)

(Unaudited)

	Three months ended
		March 31,
		2024			2023
Net income (loss)	$	(419)	$	(253)
Other comprehensive income (loss), net of tax:
Currency translation adjustment		(123)		120
Unrealized gain (loss) from derivative financial instruments, net		7		8
Unrealized loss on defined benefit plans		(1)		(1)
Total other comprehensive income (loss)		(117)		127
Total comprehensive income (loss)		(536)		(126)
Comprehensive income (loss) attributable to non-controlling interests		(322)		(42)
Comprehensive income (loss) attributable to Teva	$	(214)	$	(84)

Amounts may not add up due to rounding.

The accompanying notes are an integral part of the financial statements.

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TEVA PHARMACEUTICAL INDUSTRIES LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

							Teva shareholders' equity
	Ordinary shares				Retained		Accumulated
	Number of				Additional							Total Teva
		Stated		earnings			other	Treasury			Non-controlling		Total
	shares (in		paid-in		(accumulated		comprehensive	shareholders'
	millions)		value		capital			deficit)				(loss)		shares				equity			interests			equity
										(U.S. dollars in	millions)
Balance at December 31, 2023	1,227	57	27,807	(13,534)			(2,697)	(4,128)			7,506			620	8,126
Net Income (loss)							(139)									(139)		(280)	(419)
Other comprehensive income
(loss)												(75)					(75)		(42)	(117)
Issuance of Shares	11	1	*												1					1
Stock-based compensation
expense					28												28			-	28
Proceeds from exercise of options					6												6					6
Dividend to non-controlling
interests**																					(18)	(18)
Purchase of shares from
non-controlling interests***					(45)						(3)					(48)		(16)	(64)
Balance at March 31, 2024
1,238		$ 58	$ 27,796	$ (13,673)	$	(2,775)	$(4,128)	$	7,278		$	265	$7,543

• Represents an amount less than $0.5 million.

• In connection with dividends to non-controlling interests in Teva's joint venture in Japan.
• Purchase of shares from non-controlling interests in Teva's subsidiary in Switzerland.

								Teva shareholders' equity
	Ordinary shares					Retained		Accumulated
	Number of				Additional								Total Teva
		Stated		earnings			other	Treasury			Non-controlling		Total
	shares (in			paid-in		(accumulated		comprehensive	shareholders'
	millions)		value			capital			deficit)				(loss)			shares				equity			interests			equity
												(U.S. dollars in	millions)
Balance at December 31, 2022**	1,217	57	27,688	(12,975)			(2,838)	(4,128)			7,804			794	8,598
Net Income (loss)**								(220)										(220)		(33)	(253)
Other comprehensive income (loss)													136						136			(9)	127
Issuance of shares	9	*	*													*					*
Stock-based compensation expense						32													32					32
Balance at March 31, 2023**
1,226		$ 57	$ 27,719	$ (13,194)	$	(2,701)	$(4,128)	$	7,752		$	751	$8,504

• Represents an amount less than $0.5 million.

• The data presented for prior periods have been revised to reflect a revision to a contingent consideration liability and related expenses in the consolidated financial statements. For additional information, see note 1c.

Amounts may not add up due to rounding.

The accompanying notes are an integral part of the financial statements.

8

TEVA PHARMACEUTICAL INDUSTRIES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in millions)

(Unaudited)

	Three months ended
		March 31,
		2024		2023
Operating activities:
Net income (loss)	$	(419)	(253)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization		272		304
Impairment of goodwill, long-lived assets and assets held for sale		679	189
Net change in operating assets and liabilities		(497)	(349)
Deferred income taxes - net and uncertain tax positions		(189)	(106)
Stock-based compensation		28		32
Other items		2		34
Net loss (gain) from investments and from sale of long-lived assets		-	4
Net cash provided by (used in) operating activities		(124)	(145)
Investing activities:
Beneficial interest collected in exchange for securitized trade receivables		295		323
Purchases of property, plant and equipment and intangible assets		(124)	(139)
Proceeds from sale of business and long-lived assets		-	2
Acquisition of businesses, net of cash acquired		(15)	-
Purchases of investments and other assets		(12)	(4)
Other investing activities		-	(1)
Net cash provided by (used in) investing activities		144		181
Financing activities:
Purchase of shares from non-controlling interests		(64)	-
Dividends paid to non-controlling interests		(78)	-
Repayment of senior notes and loans and other long-term liabilities		-	(3,152)
Proceeds from senior notes, net of issuance costs		-	2,451
Other financing activities		(9)	(5)
Net cash provided by (used in) financing activities
	(151)	(706)
Translation adjustment on cash and cash equivalents		(104)	12
Net change in cash, cash equivalents and restricted cash
	(236)	(658)
Balance of cash, cash equivalents and restricted cash at beginning of period		3,227		2,834
Balance of cash, cash equivalents and restricted cash at end of period
$	2,991		2,176
Cash and cash equivalents		2,991		2,143
Restricted cash included in other current assets		-	33
Total cash, cash equivalents and restricted cash shown in the statement of cash flows		2,991		2,176
Non-cash financing and investing activities:
Beneficial interest obtained in exchange for securitized accounts receivables	$	312		334

Amounts may not add up due to rounding

The accompanying notes are an integral part of the financial statements.

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TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 - Basis of presentation:

1. Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements. In the opinion of management, the financial statements reflect all normal and recurring adjustments necessary to fairly state the financial position and results of operations of Teva. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission ("SEC"). The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2023, but not all disclosures required by generally accepted accounting principles in the United States ("U.S. GAAP") are included.

In preparing the Company's consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity and disclosure of contingent liabilities and assets at the dates of the financial statements and the reported amounts of revenues and expenses during the reported years. Actual results could differ from those estimates.

In preparing the Company's consolidated financial statements, management also considered the economic implications of inflation expectations on its critical and significant accounting estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to determining the valuation and recoverability of IPR&D assets, marketed product rights and goodwill, assessing sales reserves and allowances in the United States, uncertain tax positions, valuation allowances and contingencies. These estimates could be impacted by higher costs and the ability to pass on such higher costs to customers, which is highly uncertain. Government actions taken to address macroeconomic developments, as well as their economic impact on Teva's third-party manufacturers and suppliers, customers and markets, could also impact such estimates and may change in future periods.

In February 2022, Russia launched an invasion of Ukraine. As of the date of these consolidated financial statements, sustained conflict and disruption in the region is ongoing. Russia and Ukraine markets are included in Teva's International Markets segment results. Teva has no manufacturing or R&D facilities in these markets. During the three months ended March 31, 2024, the impact of this conflict on Teva's results of operation and financial condition continues to be immaterial.

In October 2023, Israel was attacked by a terrorist organization and entered a state of war. As of the date of these consolidated financial statements, the war in Israel is ongoing and continues to evolve. Israel is included in Teva's International Markets segment results. Teva's global headquarters and several manufacturing and R&D facilities are located in Israel. Currently, such activities in Israel remain largely unaffected. Teva continues to maintain contingency plans with backup production locations for key products. During the three months ended March 31, 2024, the impact of this war on Teva's results of operations and financial condition is immaterial, but such impact may increase, which could be material, as a result of the continuation, escalation or expansion of such war.

Teva's results of operations for the three months ended March 31, 2024 are not necessarily indicative of results that could be expected for the entire fiscal year.

Certain amounts in the consolidated financial statements and associated notes may not add up due to rounding. All percentages have been calculated using unrounded amounts.

1. Significant accounting policies

Recently adopted accounting pronouncements

None.

Recently issued accounting pronouncements, not yet adopted

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.

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