The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021 were as follows:


	North America			Europe			International Markets			Other			Total
	(U.S. $ in millions)
Balance as of December 31, 2020 (1)	$	6,473		$	9,102		$	2,362		$	2,687		$	20,624
Changes during the period:
Goodwill reclassified as assets held for sale		—			(7	)		—			(11	)		(18	)
Translation differences		1			(551	)		(34	)		18			(566	)

Balance as of December 31, 2021 (1)	$	6,474		$	8,544		$	2,328		$	2,694		$	20,040
Changes during the period:
Goodwill impairment		—			—			(979	)		(1,066	)		(2,045	)
Goodwill acquired		—			—			—			12			12
Translation differences		(24	)		(242	)		(10	)		(98	)		(374	)

Balance as of December 31, 2022 (1) (*)	$	6,450		$	8,302		$	1,339		$	1,542		$	17,633

(1)	Accumulated goodwill impairment as of December 31, 2022, December 31, 2021 and December 31, 2020 was approximately $27.6 billion, $25.6 billion and $25.6 billion, respectively.

(*)	As of December 31, 2022, “Other” includes $1,293 million goodwill balance related to Teva’s API reporting unit.

Teva operates its business through three reporting segments: North America, Europe and International Markets. Each of these business segments is a reporting unit. Additional reporting units include Teva’s production and sale of APIs to third parties (“Teva API”) and an

out-licensing

platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis. Teva’s API and Medis reporting units are included under “Other” in the above table. See note 19 for additional segment information.

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.

First Quarter Developments

During the first quarter of 2022, management evaluated whether there were any developments that occurred during the quarter to determine if it was more likely than not that the fair value of any of its reporting units was below its carrying amount as of March 31, 2022. Management concluded that no triggering event had occurred and therefore, no interim impairment assessment was performed.

Second Quarter Developments

During the second quarter 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.

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 (see ‘Fourth Quarter Developments’ below).

The estimated fair value of Teva’s Europe reporting unit exceeded its estimated carrying amount by 9% based on a terminal growth rate of 1.41% and a discount rate of 10.04%. If Teva held 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 have resulted in a reduction of the excess of fair value over carrying amount with respect to Teva’s Europe reporting unit, as of June 30, 2022, to 5%.

Teva’s North America and Medis reporting units had a fair value in excess of 10% over their book values as of June 30, 2022.

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

Third Quarter Developments

During the third quarter of 2022, management evaluated whether there were any developments that occurred during the quarter to determine if it was more likely than not that the fair value of any of its reporting units was below its carrying amount as of September 30, 2022. Management concluded that no triggering event had occurred and therefore, no interim impairment assessment was performed.

Fourth Quarter Developments

During the fourth quarter of 2022, Teva completed its annual operating plan (“AOP”) process. The AOP was used as a base for an update of the LRP, incorporating the changes for future years in the fair value model.

Additionally, management evaluated whether there were any developments that occurred during the quarter to determine if it is more likely than not that the fair value of any of its reporting units was below its carrying amount as of December 31, 2022.

Management noted the following main triggering events during the fourth quarter for its International Markets reporting unit and its Teva’s API reporting unit: (i) fluctuations in exchange rates between certain

currencies in which Teva operates in its International Markets reporting unit, and the U.S. dollar, are expected to significantly lower projected operating results; and (ii) updated assumptions supporting the cash flow projections of Teva’s API reporting unit, including certain revenue growth assumptions, and the associated operating profit margins, mainly due to slower-than-expected recovery from the impact of the

COVID-19

pandemic.

Management performed a quantitative assessment in the fourth quarter of 2022, which resulted in the recording of a goodwill impairment charge of $500 million related to its International Markets reporting unit and $800 million related to its Teva’s API reporting unit.

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 December 31, 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.

With respect to the remaining reporting units, management concluded that it was not more likely than not that the fair value of any of the reporting units was below its carrying amounts as of December 31, 2022 and, therefore, no quantitative assessment was performed.