(1)	Accumulated goodwill impairment as of June 30, 2022 and December 31, 2021 was approximately $26.3 billion and $25.6 billion, respectively.

Teva determines the fair value of its reporting units using the income approach. The income approach is a forward-looking approach for estimating fair value. Within the income approach, the method used is the discounted cash flow method. Teva starts with a forecast of all the expected net cash flows associated with the reporting unit, which includes the application of a terminal value, and then applies a discount rate to arrive at a net present value amount. Cash flow projections are based on Teva’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted average cost of capital (“WACC”), adjusted for the relevant risk associated with country-specific and business-specific characteristics. If any of these expectations were to vary materially from Teva’s assumptions, Teva may record an impairment of goodwill allocated to these reporting units in the future.

During

the second qu

arter of

2022

, Teva completed its long-range planning (“LRP”) process. The LRP is part of Teva’s internal financial planning and budgeting processes and is discussed and reviewed by Teva’s management and its board of directors.

Additionally, Teva conducted a quantitative analysis of all reporting units as part of its annual goodwill impairment test with the assistance of an independent valuation expert.

Teva identified an increase in certain components of the discount rate, mainly attributable to: (i) the risk-free interest rate, which resulted in an increase in the WACC; and (ii) the risk associated with country-specific characteristics of several countries.

Based on this quantitative analysis, in the second quarter of 2022, Teva recorded a goodwill impairment charge of

$745

million as follows: (i)

$479

million related to its International Markets reporting unit, mainly due to the increase in the discount rate; and (ii)

$266

million related to its Teva’s API reporting unit, mainly due to the increase in the discount rate, as well as updated assumptions supporting the cash flow projections, including certain revenue growth assumptions and the associated operating profit margins. Teva’s API reporting unit is included under “Other” in the table above.

Following the goodwill impairment charges recorded in relation to Teva’s International Markets and Teva’s API reporting units, the carrying values of

those reporting units

equaled their fair value as of June 30, 2022. Therefore, if business conditions or expectations were to change materially, it may be necessary to record further impairment charges to Teva’s International Markets or Teva’s API reporting units in the future.

The estimated fair value of Teva’s Europe reporting unit exceeds its estimated carrying amount by 9% based on a terminal growth rate of 1.41% and a discount rate of 10.04%. If Teva holds all other assumptions constant, a reduction in the terminal growth rate of 0.50% to 0.91% or an increase in the discount rate of 0.50% to 10.54% would result in a reduction of the excess of fair value over carrying amount with respect to Teva’s Europe reporting unit to 5%.

Teva’s

North America and Medis reporting units have

fair value in excess of 10% over their book values as of June 30, 2022

Teva noted its market capitalization has been below management’s assessment of the aggregated fair value of the Company’s reporting units. However, as of June 30, 2022, the Company’s market capitalization plus a reasonable control premium exceeded its book value.