Goodwill

3 Months Ended

Mar. 31, 2023

NOTE 6 – Goodwill:

Changes in the carrying amount of goodwill for the period ended March 31, 2023 were as follows:


	North America		Europe		International Markets		Other				Total
	North America		Europe		International Markets		Teva’s API		Medis		Total

	(U.S. $ in millions)
Balance as of December 31, 2022 (1)	$	6,450	$	8,302	$	1,339	$	1,293	$	249	$	17,633
Changes during the period:
Translation differences		1		82		61		12		10		166

Balance as of March 31, 2023 (1)	$	6,451	$	8,384	$	1,400	$	1,305	$	259	$	17,799

(1)	Accumulated goodwill impairment as of March 31, 2023 and December 31, 2022 was approximately $27.6 billion.

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 15 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 begins 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 Deve

pments

During the first quarter of 2023, 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, 2023. Management concluded that no triggering event had occurred and, therefore, no quantitative assessment was performed.

Following the goodwill impairment charges recorded in the fourth quarter of 2022 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. Additionally, as part of the quantitative analysis Teva conducted as part of its annual goodwill impairment test in the second quarter of 2022, it concluded that the estimated fair value of Teva’s Europe reporting unit exceeded its estimated carrying amount by 9%. Therefore, if business conditions or expectations were to change materially, it may be necessary to record further impairment charges to Teva’s International Markets, Teva’s Europe or Teva’s API reporting units in the future.