| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
e | ||
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification Number) | |
(Address of principal executive offices) |
(Zip code) | |
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| ☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
| Emerging growth company | ||||||
| PART I. |
||||||
| Item 1. |
5 |
|||||
5 |
||||||
6 |
||||||
7 |
||||||
8 |
||||||
10 |
||||||
11 |
||||||
| Item 2. |
48 |
|||||
| Item 3. |
79 |
|||||
| Item 4. |
79 |
|||||
| PART II. |
||||||
| Item 1. |
80 |
|||||
| Item 1A. |
80 |
|||||
| Item 2. |
80 |
|||||
| Item 3. |
80 |
|||||
| Item 4. |
80 |
|||||
| Item 5. |
80 |
|||||
| Item 6. |
81 |
|||||
82 |
||||||
• |
our ability to successfully compete in the marketplace, including: that we are substantially dependent on our generic products; consolidation of our customer base and commercial alliances among our customers; delays in launches of new generic products; the increase in the number of competitors targeting generic opportunities and seeking U.S. market exclusivity for generic versions of significant products; our ability to develop and commercialize biopharmaceutical products; competition for our specialty products, including AUSTEDO ® , AJOVY® and COPAXONE® ; our ability to achieve expected results from investments in our product pipeline; our ability to develop and commercialize additional pharmaceutical products; and the effectiveness of our patents and other measures to protect our intellectual property rights; |
• |
our substantial indebtedness, which may limit our ability to incur additional indebtedness, engage in additional transactions or make new investments, may result in a further downgrade of our credit ratings; and our inability to raise debt or borrow funds in amounts or on terms that are favorable to us; |
• |
our business and operations in general, including: uncertainty regarding the COVID-19 pandemic and its impact on our business, financial condition, operations, cash flows, and liquidity and on the economy in general; our ability to successfully execute and maintain the activities and efforts related to the measures we have taken or may take in response to the COVID-19 pandemic and associated costs therewith; effectiveness of our optimization efforts; our ability to attract, hire and retain highly skilled personnel; manufacturing or quality control problems; interruptions in our supply chain; disruptions of information technology systems; breaches of our data security; variations in intellectual property laws; challenges associated with conducting business globally, including political or economic instability, major hostilities or terrorism; costs and delays resulting from the extensive pharmaceutical regulation to which we are subject or delays in governmental processing time due to travel and work restrictions caused by the COVID-19 pandemic; the effects of reforms in healthcare regulation and reductions in pharmaceutical pricing, reimbursement and coverage; significant sales to a limited number of customers; our ability to successfully bid for suitable acquisition targets or licensing opportunities, or to consummate and integrate acquisitions; and our prospects and opportunities for growth if we sell assets; |
• |
compliance, regulatory and litigation matters, including: failure to comply with complex legal and regulatory environments; increased legal and regulatory action in connection with public concern over the abuse of opioid medications and our ability to reach a final resolution of the remaining opioid-related litigation; scrutiny from competition and pricing authorities around the world, including our ability to successfully defend against the U.S. Department of Justice (“DOJ”) criminal charges of Sherman Act violations; potential liability for patent infringement; product liability claims; failure to comply with complex Medicare and Medicaid reporting and payment obligations; compliance with anti-corruption sanctions and trade control laws; and environmental risks; |
• |
other financial and economic risks, including: our exposure to currency fluctuations and restrictions as well as credit risks; potential impairments of our intangible assets; potential significant increases in tax liabilities (including as a result of potential tax reform in the United States); and the effect on our overall effective tax rate of the termination or expiration of governmental programs or tax benefits, or of a change in our business; |
ITEM 1. |
FINANCIAL STATEMENTS |
September 30, |
December 31, |
|||||||
2021 |
2020 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
$ |
||||||
| Accounts receivables, net of allowance for credit losses of $ |
||||||||
| Inventories |
||||||||
| Prepaid expenses |
||||||||
| Other current assets |
||||||||
| Assets held for sale |
||||||||
| |
|
|
|
|||||
| Total current assets |
||||||||
| Deferred income taxes |
||||||||
| Other non-current assets |
||||||||
| Property, plant and equipment, net |
||||||||
| Operating lease right-of-use |
||||||||
| Identifiable intangible assets, net |
||||||||
| Goodwill |
||||||||
| |
|
|
|
|||||
| Total assets |
$ |
$ |
||||||
| |
|
|
|
|||||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Short-term debt |
$ |
$ |
||||||
| Sales reserves and allowances |
||||||||
| Accounts payables |
||||||||
| Employee-related obligations |
||||||||
| Accrued expenses |
||||||||
| Other current liabilities |
||||||||
| |
|
|
|
|||||
| Total current liabilities |
||||||||
| Long-term liabilities: |
||||||||
| Deferred income taxes |
||||||||
| Other taxes and long-term liabilities |
||||||||
| Senior notes and loans |
||||||||
| Operating lease liabilities |
||||||||
| |
|
|
|
|||||
| Total long-term liabilities |
||||||||
| |
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Total liabilities |
||||||||
| |
|
|
|
|||||
| Equity: |
||||||||
| Teva shareholders’ equity: |
||||||||
| Ordinary shares of NIS |
||||||||
| Additional paid-in capital |
||||||||
| Accumulated deficit |
( |
) | ( |
) | ||||
| Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
| Treasury shares as of September 30, 2021 and December 31, 2020 — |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| |
|
|
|
|||||
| Non-controlling interests |
||||||||
| |
|
|
|
|||||
| Total equity |
||||||||
| |
|
|
|
|||||
| Total liabilities and equity |
$ |
$ |
||||||
| |
|
|
|
|||||
Three months ended |
Nine months ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
| Net revenues |
$ |
$ |
$ |
$ |
||||||||||||
| Cost of sales |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Gross profit |
||||||||||||||||
| Research and development expenses |
||||||||||||||||
| Selling and marketing expenses |
||||||||||||||||
| General and administrative expenses |
||||||||||||||||
| Intangible assets impairments |
||||||||||||||||
| Goodwill impairment |
||||||||||||||||
| Other assets impairments, restructuring and other items |
( |
) | ||||||||||||||
| Legal settlements and loss contingen c ies |
||||||||||||||||
| Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Operating income (loss) |
( |
) | ( |
) | ||||||||||||
| Financial expenses, net |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
( |
) | ( |
) | ||||||||||||
| Income taxes (benefit) |
( |
) | ||||||||||||||
| Share in (profits) losses of associated companies, net |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
( |
) | ( |
) | ||||||||||||
| Net income (loss) attributable to non-controlling interests |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Net income (loss) attributable to Teva |
( |
) | ( |
) | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Earnings (loss) per share attributable to ordinary shareholders: |
||||||||||||||||
| Basic |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Weighted average number of shares (in millions): |
||||||||||||||||
| Basic |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Diluted |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
Three months ended |
Nine months ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
| Net income (loss) |
$ |
$ | ( |
) | $ |
$ |
( |
) | ||||||||
| Other comprehensive income (loss), net of tax: |
||||||||||||||||
| Currency translation adjustment |
( |
) | ( |
) | ( |
) | ||||||||||
| Unrealized gain (loss) from derivative financial instrum e nts, net |
||||||||||||||||
| Unrealized loss on defined benefit plans |
||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total other comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income (loss) |
( |
) | ( |
) | ||||||||||||
| Comprehensive income (loss) attributable to non-controlling interests |
( |
) | ( |
) | ( |
) | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Comprehensive income (loss) attributable to Teva |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
| |
|
|
|
|
|
|
|
|||||||||
Teva shareholders’ equity |
||||||||||||||||||||||||||||||||||||
Ordinary shares |
||||||||||||||||||||||||||||||||||||
Number of shares (in millions) |
Stated value |
Additional paid-in capital |
Retained earnings (accumulated deficit) |
Accumulated other comprehensive (loss) |
Treasury shares |
Total Teva shareholders’ equity |
Non-controlling interests |
Total equity |
||||||||||||||||||||||||||||
(U.S. dollars in millions) |
||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Net Income (loss) |
||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Issuance of Shares |
* | * | * | * | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense |
||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at September 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| * | Represents an amount less than $ |
Teva shareholders’ equity |
||||||||||||||||||||||||||||||||||||
Ordinary shares |
||||||||||||||||||||||||||||||||||||
Number of shares (in millions) |
Stated value |
Additional paid-in capital |
Retained earnings (accumulated deficit) |
Accumulated other comprehensive (loss) |
Treasury shares |
Total Teva shareholders’ equity |
Non-controlling interests |
Total equity |
||||||||||||||||||||||||||||
(U.S. dollars in millions) |
||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Net Income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
| Issuance of Shares |
* | * | * |
* | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense |
||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at September 30, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| * | Represents an amount less than $ |
Teva shareholders’ equity |
||||||||||||||||||||||||||||||||||||
Ordinary shares |
||||||||||||||||||||||||||||||||||||
Number of shares (in millions) |
Stated value |
Additional paid-in capital |
Retained earnings (accumulated deficit) |
Accumulated other comprehensive (loss) |
Treasury shares |
Total Teva shareholders’ equity |
Non-controlling interests |
Total equity |
||||||||||||||||||||||||||||
(U.S. dollars in millions) |
||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Net Income (loss) |
||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Issuance of Shares |
* | * | * | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense |
||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at September 30, 2021 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| * | Represents an amount less than $ |
Teva shareholders’ equity |
||||||||||||||||||||||||||||||||||||
Ordinary shares |
||||||||||||||||||||||||||||||||||||
Number of shares (in millions) |
Stated value |
Additional paid-in capital |
Retained earnings (accumulated deficit) |
Accumulated other comprehensive (loss) |
Treasury shares |
Total Teva shareholders’ equity |
Non-controlling interests |
Total equity |
||||||||||||||||||||||||||||
(U.S. dollars in millions) |
||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Net Income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Other comprehensive i n come (loss) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
| Issuance of shares |
* | * | * | |||||||||||||||||||||||||||||||||
| Stock-based compensation expense |
||||||||||||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance at September 30, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| * | Represents an amount less than $ |
Nine months ended |
||||||||
September 30, |
||||||||
2021 |
2020 |
|||||||
| Operating activities: |
||||||||
| Net income (loss) |
$ |
$ |
( |
) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by o p erations: |
||||||||
| Depreciation and amortization |
||||||||
| Impairment of long-lived assets and assets held for sale |
||||||||
| Net change in operating assets and liabilities |
( |
) | ( |
) | ||||
| Deferred income taxes – net and uncertain tax positions |
( |
) | ||||||
| Stock-based compensation |
||||||||
| Net loss (gain) from investments and from sale of long lived assets |
( |
) | ||||||
| Research and development in process |
||||||||
| Other items |
( |
) | ||||||
| |
|
|
|
|||||
| Net cash provided by (used in) operating activities |
||||||||
| |
|
|
|
|||||
| Investing activities: |
||||||||
| Beneficial interest collected in exchange for securitized accounts receivables |
||||||||
| Purchases of property, plant and equipment |
( |
) | ( |
) | ||||
| Proceeds from sale of business and long lived assets |
||||||||
| Proceeds from sale of investments |
||||||||
| Other investing activities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash provided by investing activities |
||||||||
| |
|
|
|
|||||
| Financing activities: |
||||||||
| Repayment of senior notes and loans and other long-term liabilities |
( |
) | ( |
) | ||||
| Proceeds from short term debt |
||||||||
| Repayment of short term debt |
( |
) | ( |
) | ||||
| Redemption of convertible senior notes |
( |
) | ||||||
| Other financing activities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Translation adjustment on cash and cash equivalents |
( |
) | ||||||
| |
|
|
|
|||||
| Net change in cash and cash equivalents |
( |
) | ( |
) | ||||
| Balance of cash and cash equivalents at beginning of period |
||||||||
| |
|
|
|
|||||
| Balance of cash and cash equivalents at end of period |
$ |
$ |
||||||
| |
|
|
|
|||||
| Non-cash financing and investing activities: |
||||||||
| Beneficial interest obtained in exchange for securitized accounts receivables |
$ |
$ |
||||||
a. |
Basis of presentation |
b. |
Significant accounting policies |
September 30, |
December 31, |
|||||||
2021 |
2020 |
|||||||
(U.S. $ in millions) |
||||||||
| Inventories |
||||||||
| Property, plant and equipment, net and others |
||||||||
| Goodwill |
||||||||
| Adjustments of assets held for sale to fair value |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Total assets of the disposal group classified as held for sale in the consolidated balance sheets |
$ | $ | ||||||
| |
|
|
|
|||||
Three months ended September 30, 2021 |
||||||||||||||||||||
North America |
Europe |
International Markets |
Other activities |
Total |
||||||||||||||||
(U.S. $ in millions) |
||||||||||||||||||||
| Sale of goods |
||||||||||||||||||||
| Licensing arrangements |
||||||||||||||||||||
| Distribution |
§ | |||||||||||||||||||
| Other |
||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Three months ended September 30, 2020 |
||||||||||||||||||||
North America |
Europe |
International Markets |
Other activities |
Total |
||||||||||||||||
(U.S. $ in millions) |
||||||||||||||||||||
| Sale of goods |
||||||||||||||||||||
| Licensing arrangements |
||||||||||||||||||||
| Distribution |
§ | |||||||||||||||||||
| Other |
( |
( |
) | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
Nine months ended September 30, 2021 |
||||||||||||||||||||
North America |
Europe |
International Markets |
Other activities |
Total |
||||||||||||||||
(U.S. $ in millions) |
||||||||||||||||||||
| Sale of goods |
||||||||||||||||||||
| Licensing arrangements |
||||||||||||||||||||
| Distribution |
§ | |||||||||||||||||||
| Other |
§ | |||||||||||||||||||
| |
|
|
|
|
||||||||||||||||