Goodwill

3 Months Ended

Mar. 31, 2024

NOTE 6 – Goodwill:

Changes in the carrying amount of goodwill for the period ended March 31, 2024 were as follows:


	North America			United States		Europe			International Markets			Other						Total
	North America			United States		Europe			International Markets			Teva’s API			Medis			Total
				(U.S. $ in millions)
Balance as of December 31, 2023 (1)	$	6,459		$	—	$	8,466		$	675		$	1,313		$	265		$	17,177
Goodwill allocation related to the shift of Canada to International Markets		(6,459	)		5,813		—			646			—			—			—

Balance as of January 1, 2024	$	—		$	5,813	$	8,466		$	1,321		$	1,313		$	265		$	17,177

Other changes during the period:
Goodwill reclassified as assets held for sale		—			—		—			(48	)		—			—			(48	)
Translation differences		—			—		(104	)		6			(14	)		(10	)		(122	)

Balance as of March 31, 2024 (1)	$	—		$	5,813	$	8,362		$	1,279		$	1,299		$	255		$	17,007

(1)	Cumulative goodwill impairment as of March 31, 2024 and December 31, 2023 was approximately $28.3 billion.

Teva operates its business through three reporting segments: United States, 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 table above. 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 Developments

As further discussed in note 15, as of January 1, 2024, Canada is reported as part of Teva’s International Markets segment and not as part of Teva’s North America segment, which has been renamed as Teva’s United States segment. As a result, Teva aligned its segment reporting and its reporting units in accordance with this change, and reallocated its goodwill to the adjusted reporting units using a relative fair value allocation. In conjunction with the goodwill reallocation, Teva performed a goodwill impairment test for the balances in its adjusted United States and International Markets reporting units and concluded that the fair value of each reporting unit was in excess of its carrying value. If business conditions or expectations (such as exchange rates, growth rates or discount rates) were to adversely change, it may be necessary to record impairment charges to Teva’s International Markets reporting unit in the future.

During the first quarter of 2024, 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, 2024. Management concluded that no triggering event had occurred and, therefore, no quantitative assessment was performed.

Following the quantitative assessment performed in relation to Teva’s API reporting unit in the fourth quarter of 2023, the excess of its estimated fair value over its estimated carrying amount was negligible. Additionally, as part of the quantitative analysis Teva conducted as part of its annual goodwill impairment test in the second quarter of 2023, it concluded that the estimated fair value of Teva’s Europe reporting unit exceeded its estimated carrying amount by 3%.