Teva Pharmaceutical Industries Ltd. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Teva Pharmaceutical Industries Ltd. reported on its Q1 2024 financial activities, highlighting significant debt extinguishments and issuances of sustainability-linked bonds with potential interest adjustments.</b>

AI Summary

TEVA PHARMACEUTICAL INDUSTRIES LTD (TEVJF) filed a Quarterly Report (10-Q) with the SEC on May 8, 2024. Teva extinguished $631M of 6% senior notes due 2025, $432M of 4.5% senior notes due 2025, $574M of 7.13% senior notes due 2025, $454M of 2.8% senior notes due 2023, $293M of 6% senior notes due 2024, and $122M of 3.15% senior notes due 2026 in March 2023. In March 2023, Teva issued $600M in sustainability-linked senior notes (7.88% interest, due Sept 2029) and $500M (8.13% interest, due Sept 2031). In March 2023, Teva issued €800M in sustainability-linked senior notes (7.38% interest, due Sept 2029) and €500M (7.88% interest, due Sept 2031). Failure to meet sustainability targets on these notes could result in interest rate increases of 0.100%-0.375% per annum and/or premium payments. Teva repaid $956 million of its 6% senior notes at maturity in April 2024.

Why It Matters

For investors and stakeholders tracking TEVA PHARMACEUTICAL INDUSTRIES LTD, this filing contains several important signals. The company's debt management activities, including tender offers and repayments, indicate a focus on optimizing its capital structure and managing interest expenses. The inclusion of sustainability-linked bonds introduces performance-based financial metrics, tying interest rates and potential premiums to environmental, social, and governance (ESG) targets.

Risk Assessment

Risk Level: medium — TEVA PHARMACEUTICAL INDUSTRIES LTD shows moderate risk based on this filing. The company has issued multiple series of sustainability-linked bonds with varying interest rate adjustments and premium payments tied to specific performance targets, creating complexity in financial forecasting and potential for increased interest expense if targets are not met.

Analyst Insight

Monitor Teva's progress towards its stated sustainability performance targets to assess the potential impact on its future interest expenses and overall financial health.

Key Numbers

• 631 — Million USD (Principal amount of 6% senior notes due 2025 extinguished in March 2023)
• 432 — Million USD (Principal amount of 4.5% senior notes due 2025 extinguished in March 2023)
• 574 — Million USD (Principal amount of 7.13% senior notes due 2025 extinguished in March 2023)
• 454 — Million USD (Principal amount of 2.8% senior notes due 2023 extinguished in March 2023)
• 293 — Million USD (Principal amount of 6% senior notes due 2024 extinguished in March 2023)
• 122 — Million USD (Principal amount of 3.15% senior notes due 2026 extinguished in March 2023)
• 600 — Million USD (Principal amount of sustainability-linked senior notes issued in March 2023)
• 956 — Million USD (Principal amount of 6% senior notes repaid in April 2024)

Key Players & Entities

• TEVA PHARMACEUTICAL INDUSTRIES LTD (company) — Filer
• Teva Pharmaceutical Industries Limited (company) — Business Address
• $631 million (dollar_amount) — Aggregate principal amount of 6% senior notes due in 2025 extinguished
• $432 million (dollar_amount) — Aggregate principal amount of 4.5% senior notes due in 2025 extinguished
• $574 million (dollar_amount) — Aggregate principal amount of 7.13% senior notes due in 2025 extinguished
• $454 million (dollar_amount) — Aggregate principal amount of 2.8% senior notes due in 2023 extinguished
• $293 million (dollar_amount) — Aggregate principal amount of 6% senior notes due in 2024 extinguished
• $122 million (dollar_amount) — Aggregate principal amount of 3.15% senior notes due in 2026 extinguished

FAQ

Filing Documents

• d776015d10q.htm (10-Q) — 1977KB
• d776015dex101.htm (EX-10.1) — 72KB
• d776015dex311.htm (EX-31.1) — 10KB
• d776015dex312.htm (EX-31.2) — 10KB
• d776015dex32.htm (EX-32) — 4KB
• 0001193125-24-134200.txt (&nbsp;) — 11385KB
• teva-20240331.xsd (EX-101.SCH) — 91KB
• teva-20240331_cal.xml (EX-101.CAL) — 49KB
• teva-20240331_def.xml (EX-101.DEF) — 596KB
• teva-20240331_lab.xml (EX-101.LAB) — 614KB
• teva-20240331_pre.xml (EX-101.PRE) — 625KB
• d776015d10q_htm.xml (XML) — 2227KB

Financial Statements (unaudited)

Financial Statements (unaudited) Item 1.

Financial Statements (unaudited)

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

Notes to Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 46 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 66 Item 4.

Controls and Procedures

Controls and Procedures 66 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 68 Item 1A.

Risk Factors

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

Signatures 71 2 Table of Contents 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.

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION ITEM1.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS 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 ) Tr

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) Note 1 – Basis of presentation: a. 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 cost

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) In November 2023, the FASB issued ASU 2023-07 "Segment Reporting: Improvements to Reportable Segment Disclosures". This guidance expands public entities' segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment's profit or loss and assets. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity's financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements related disclosures. In October 2023, the FASB issued ASU 2023-06 "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative," which incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification ("Codification"). The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification topics, allow investors to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC's regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The amendments in this ASU should be applied prospectively. The Company does not expect ASU 2

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View this 10-Q filing on SEC EDGAR