TEVA PHARMACEUTICAL INDUSTRIES LTD

S-K

promulgated by the SEC requires disclosure of certain environmental matters when a governmental authority is a party to the proceeding and such proceeding involves potential monetary sanctions, unless the Company reasonably believes that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $300,000. The following matter is disclosed in accordance with that requirement. On July 8, 2021, the National Green Tribunal Principal Bench, New Delhi, issued an order against Teva’s subsidiary in India, Teva API India Private Limited, finding

non-compliance

with environmental laws and assessing a penalty of $1.4 million. Teva filed an appeal before the Hon’ble Supreme Court of India, disputing certain of the findings and the amount of the penalty. On August 5, 2021, the Supreme Court of India granted a stay of the judgment by the National Green Tribunal Principal Bench. On April 8, 2025, the Supreme Court of India accepted the appeal filed by Teva’s subsidiary and a hearing will be scheduled in due course. The Company does not believe that the eventual outcome of such matter will have a material effect on its business and results of operations.

Gain Contingencies

From time to time, Teva may directly or indirectly pursue claims against certain parties, including but not limited to patent infringement lawsuits against other pharmaceutical companies to protect its patent rights, as well as derivative actions brought on behalf of Teva. Teva recognizes gain contingencies from such lawsuits when they are realized or when all related contingencies have been resolved. No gain has been recognized regarding any matter disclosed below, unless mentioned otherwise.

In October 2017, Teva filed a lawsuit in the U.S. District Court for the District of Massachusetts alleging that Eli Lilly & Co.’s (“Lilly”) marketing and sale of its galcanezumab product for the treatment of migraine infringes on nine Teva patents, including three method of treatment patents and six composition of matter patents. Lilly then submitted inter partes review (“IPR”) petitions to the Patent Trial and Appeal Board (“PTAB”), challenging the validity of the nine Teva patents. The PTAB issued decisions upholding the three method of treatment patents but finding the six composition of matter patents invalid, which decisions were affirmed by the Court of Appeals for the Federal Circuit on August 16, 2021. A jury trial regarding the three method of treatment patents resulted in a verdict in Teva’s favor on November 9, 2022. The jury’s verdict found that the three method of treatment patents were valid and infringed by Lilly and awarded Teva $176.5 million in damages. On September 26, 2023, the U.S. District Court for the District of Massachusetts issued a decision that reversed the jury’s verdict and damages award, finding Teva’s method of treatment patents to be invalid. Teva appealed and a hearing was held on September 5, 2025. A decision remains pending.

In March 2024, Teva filed a lawsuit in the U.S. District Court for the District of New Jersey alleging that Amarin Pharma, Inc., Amarin Pharmaceuticals Ireland Limited, and Amarin Corporation plc (collectively “Amarin”) engaged in a decade-long scheme to lock up the supply of icosapent ethyl to prevent and delay generic competition to its branded Vascepa

®

drug product. Teva’s lawsuit coincides with four other lawsuits brought by generic drug manufacturers and purchasers of branded Vascepa

®

alleging the same or similar conduct by Amarin. Teva’s requested relief includes compensatory damages for lost sales and lost profits from generic icosapent ethyl drug sales that Teva could have made absent Amarin’s alleged interference. On May 24, 2024, Amarin filed a motion in the U.S. District Court for the District of Nevada, seeking to enforce the terms of an earlier Teva-Amarin agreement to settle patent litigation regarding Vascepa

®

, which Amarin asserts precludes Teva from filing the present antitrust action. Teva opposed this motion on June 7, 2024, and on December 4, 2024, the Nevada court denied Amarin’s motion. On March 25, 2025, Amarin filed a

“pre-motion

letter” with the U.S. District Court of the District of New Jersey, where the case is pending, asking for permission to file a motion for judgment on the pleadings on the same grounds as its motion in Nevada. On October 8, 2025, the Court granted Amarin’s request to file its motion. Amarin served its motion on October 29, 2025. Briefing on Amarin’s motion is complete and a decision remains pending. As the lawsuit is still in its initial stages, it is not possible to predict its outcome and there is no guarantee that Teva will be granted its requested relief.

In June 2024, Teva filed a lawsuit in the U.S. District Court for the Northern District of California alleging that Corcept Therapeutics, Inc. (“Corcept”) and Optime Care Inc. (“Optime”) engaged in a multifaceted, years-long scheme to stifle generic competition to Corcept’s branded Korlym

®

(mifepristone) drug product, which is indicated to treat endogenous Cushing’s syndrome. Teva alleges that Corcept and Optime have suppressed competition by abusing the patent and judicial systems, entering a long-term, blanket exclusive-dealing agreement that has locked up a key pharmaceutical distribution channel, and making illicit payments to physicians as compensation for prescribing Korlym

®

. Teva’s requested relief includes compensatory damages for lost sales and lost profits from generic mifepristone drug sales that Teva could have made absent Corcept and Optime’s alleged interference, as well as injunctive relief to remove the unlawful barriers to generic competition created by Corcept and Optime. Teva filed an amended complaint in September 2024. Defendants filed a joint motion to dismiss in October 2024, which the court denied in substantial part on September 12, 2025. On September 26, 2025, Teva filed an amended complaint amending certain claims that were dismissed. On October 31, 2025, Corcept and Optime filed a motion to dismiss certain claims in Teva’s second amended complaint. Briefing on that motion is now complete and a decision remains pending. On January 14, 2026, Teva filed a motion for leave to serve a supplemental pleading, to add a new claim for unlawful exclusive dealing against Corcept and another specialty pharmacy, Curant Health LLC. Discovery is ongoing. As the lawsuit is still in its initial stages, it is not possible to predict its outcome and there is no guarantee that Teva will be granted its requested relief.

Motions to approve derivative actions seeking monetary damages against certain past and present directors and officers have been filed in Israeli Courts alleging negligence and recklessness, as well as motions for document disclosure prior to initiating derivative actions. These motions were filed with respect to several U.S. and EU settlement agreements, allegations related to the DOJ PAP Complaint, and with respect to the European Commission’s proceedings relating to COPAXONE.

NOTE 13—Income taxes:

The following table presents the reconciliation between the Company’s theoretical income tax and effective income tax for the year ended December 31, 2025 after the adoption of ASU

2023-09:

The following table presents the reconciliation between the Company’s theoretical income taxes and effective income taxes for the years ended December 31, 2024 and 2023 prior the adoption of ASU

2023-09:

The

amount as of December 31, 2025 represents the tax effect of gross carryforward losses and deductions with the following expirations:

— $

59 million;

— $

552 million;

and thereafter—$

453 million. The remaining balance—$

1,170

million—can be utilized with no expiration date.

The deferred income taxes are reflected in the balance sheets among:

The following table summarizes the activity of Teva’s gross unrecognized tax benefits:

Uncertain tax positions, mainly of a long-term nature, included accrued potential penalties and interest of $14 million, $69 million and $224 million as of December 31, 2025, 2024 and 2023, respectively. The total amount of interest and penalties reflected in the consolidated statements of income was a net decrease of $55 million, $155 million for the years ended December 31, 2025 and 2024, respectively, and a net increase of $12 million for the year ended December 31, 2023. The above uncertain tax benefits, if recognized, would reduce Teva’s annual effective tax rate. Teva does not expect uncertain tax positions to change significantly over the next 12 months, except in the case of settlements with tax authorities or court decisions, the likelihood and timing of which are difficult to estimate.

Income taxes paid (net of refunds) for the years ended December 31, 2024 and 2023 were $471 million and $298 million respectively.

Teva files income tax returns in various jurisdictions with varying statutes of limitations. Teva and its subsidiaries in Israel have received final tax assessments through tax year 2020.

On June 23, 2024, Teva entered into an agreement with the ITA to settle certain litigation with respect to taxes payable for the Company’s taxable years 2008 through 2020 (the “Agreement”). Pursuant to the terms of the Agreement, the Company will pay a total amount of approximately $750 million (based on exchange rates at the date of the Agreement) to the ITA spread over a

six-year

period beginning in 2024. Additionally, under the terms of the Agreement, it was further agreed that the Company pays dividends on, or repurchases, its equity interests, the Company will pay an additional

5%-7%

of such amounts in corporate taxes, up to a maximum tax payment amount of approximately $500 million. Any amounts due under this provision of the Agreement will be recorded as incurred.

In the U.S., Teva is subject to ongoing examination of its U.S. subsidiaries by federal and state tax authorities. The years 2016 to 2019 are open years, and under IRS examination. Additionally, Teva is currently under examination by various state tax authorities for open years from 2016 to 2023. Besides these ongoing audits, Teva and its subsidiaries are in the process of closing and removing tax years 2009 to 2015 from administrative suspense, following the holding of the U.S. District Court of Appeals for the Federal Circuit, pursuant to which certain legal fees incurred related to Abbreviated New Drug Applications (“ANDAs”) were held deductible for Federal tax purposes in the years incurred.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States. The Act contains certain provisions related to the extent of deductibility for U.S. federal tax purposes of interest expense, R&D costs and other depreciable property, as well as changes to U.S. taxation of foreign subsidiaries’ earnings, and other U.S. corporate tax law changes. Pursuant to ASC 740, changes in tax rates and tax law are required to be recognized in the period in which the legislation is enacted. Teva evaluated the impact of this Act on its annual consolidated financial statements and related disclosures, and concluded the Act does not have a material impact on its 2025 consolidated financial statements.

Teva periodically assesses the need for valuation allowances against its deferred tax assets, and considers available evidence including but not limited to, the Company’s recent earnings history, forecasted future taxable income to the extent it is objectively verifiable, and significant nonrecurring items impacting those amounts. To the extent Teva’s operating results improve or deteriorate, or to the extent changes in tax laws and other factors affect Teva’s ability to utilize deferred tax assets, Teva may need to adjust its valuation allowance.

With respect to carry forward of historical nondeductible interest expenses in the U.S., the Company had sufficient positive evidence to release valuation allowances in 2025. The release resulted in the recognition of certain deferred tax assets with a corresponding income tax benefit.

Teva paid withholding taxes to the Indian tax authorities in 2012. Teva filed a claim seeking the refund of these withholding tax payments. Trial in this case is ongoing. A final and binding decision against Teva in this case may lead to an impairment of income tax (refund) receivable in an amount of up to $117 million.

The Company’s subsidiaries in Europe have received final tax assessments mainly through tax year 2019. Teva believes it has adequately provided for all of its uncertain tax positions for open years, including items currently under dispute, however, adverse outcomes to any of these positions or disputes could be material.

The Company and its subsidiaries are subject to tax in many jurisdictions, and estimation is required in recording the assets and liabilities related to income taxes. The Company believes that its accruals for tax liabilities are adequate for all open years. The Company considers various factors in making these assessments, including past history, recent interpretations of tax law, and the specifics of each matter. Because tax regulations are subject to interpretation and tax litigation is inherently uncertain, these assessments can involve a series of complex judgments regarding future events.

An assessment of the tax that would have been payable had the Company’s foreign subsidiaries distributed their income to the Company is not practicable because of the multiple levels of corporate ownership and multiple tax jurisdictions involved in each hypothetical dividend distribution.

The New Technological Enterprise Incentives Regime – Amendment 73 to the Investment Law

Since 2017, a portion of the Company’s taxable income in Israel is entitled to a preferred 6% tax rate under Amendment 73 to the Investment Law as it pertains to Special Preferred Technological Enterprises.

The new incentives regime applies to “Preferred Technological Enterprises” or “Special Preferred Technological Enterprises.” A “Preferred Technological Enterprise” is an enterprise that meet certain conditions, including,

inter alia

:

A “Special Preferred Technological Enterprise” is an enterprise that meets,

inter alia

conditions 1 and 2 above, and in addition has total annual consolidated revenues above NIS 10 billion (approximately $2.9 billion).

Preferred Technological Enterprises are subject to a corporate tax rate of 7.5% on their income derived from intellectual property in areas in Israel designated as Zone A and 12% elsewhere, while Special Preferred Technological Enterprises are subject to 6% on such income. The withholding tax on dividends from these enterprises is 4% to foreign companies (or a lower rate under a tax treaty, if applicable).

Income not eligible for Preferred Technological Enterprise benefits is taxed at the regular corporate tax rate, which is 23%, or the preferred tax rate, as the case may be.

The Parent Company and its Israeli subsidiaries elected to compute their taxable income in accordance with Income Tax Regulations (Rules for Accounting for Foreign Investors Companies and Certain Partnerships and Setting their Taxable Income), 1986. Accordingly, the taxable income or loss is calculated in U.S. dollars. Applying these regulations reduces the effect of U.S. dollar – NIS exchange rate on the Company’s Israeli taxable income.

Non-Israeli

subsidiaries are taxed according to the tax laws in their respective country of residence. Certain manufacturing subsidiaries operate in jurisdictions outside Israel, some of which benefit from tax incentives such as reduced tax rates, investment tax credits and accelerated deductions.

Pillar Two Taxation

On December 12, 2022, the EU Council announced that EU member states had reached an agreement to implement the minimum taxation component of 15% (“Pillar Two”) of the OECD’s reform of international taxation, as part of the base erosion and profit shifting (“BEPS”) for large multinational corporations. Other countries have also enacted legislation with general implementation of a global minimum tax by January 1, 2025. Although, the impact of Pillar Two on Teva’s 2025 consolidated financial statements was not material on Teva’s effective tax rate, it could have a material impact on Teva’s effective tax rate and consolidated financial statements in the future.

NOTE 14—Equity:

As of December 31, 2025 and 2024, Teva had approximately 1.3 billion and 1.2 billion ordinary shares issued respectively. Teva ordinary shares are traded on the

Tel-Aviv

Stock Exchange and on the New York Stock Exchange, in the form of American Depositary Shares (“ADSs”), each of which represents one ordinary share.

Stock-based compensation plans are comprised of stock options, RSUs, PSUs, and other equity-based awards to employees, officers, directors and consultants of the Company and its affiliates. The purpose of the plans is to (a) attract, retain, motivate, and reward such individuals, and (b) promote the creation of long-term value for shareholders of the Company by closely aligning the interests of such individuals with those of the shareholders.

On June 29, 2010, the Teva 2010 Long-Term Equity-Based Incentive Plan (“2010 Plan”) was approved by Teva’s shareholders, under which 70 million equivalent share units, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant. The 2010 Plan expired on June 28, 2015 (except with respect to awards outstanding on that date), and no additional awards under the 2010 Plan may be made.

On September 3, 2015, the Teva 2015 Long-Term Equity-Based Incentive Plan (“2015 Plan”) was approved by Teva’s shareholders, under which 43.7 million equivalent share units, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.

On April 18, 2016 and July 13, 2017, Teva’s shareholders approved an increase of an additional 33.3 million and 65 million, equivalent share units, respectively, to the share reserve of the 2015 Plan, so that a total of 77 million and 142 million, equivalent share units, respectively, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.

The 2015 Plan expired on June 30, 2020 (except with respect to awards outstanding on that date), and no additional awards under the 2015 Plan may be made.

On June 11, 2020, the Teva 2020 Long-Term Equity-Based Incentive Plan (“2020 Plan”) was approved by Teva’s shareholders and became effective on July 1, 2020. Under the 2020 Plan,68 million shares, including options exercisable into ordinary shares, RSUs and PSUs, were approved for grant.

As of December 31, 2025,52.1 million shares remain available for future awards under the 2020 Plan.

In the past, Teva had various employee-stock and incentive plans under which stock options and other share-based awards were granted. Stock options and other share-based awards granted under such prior plans continue in accordance with the terms of the respective plans.

The vesting period of the outstanding options and RSUs is generally between one to four years from grant date. The vesting period of PSUs is generally three years from grant date. The rights of ordinary shares obtained from the exercise of options, RSUs or PSUs are identical to those of other ordinary shares of the Company. The contractual term of these options is primarily for ten years.

Status of options

A summary of the status of the options previously granted by Teva as of December 31, 2025, 2024 and 2023, and changes during the years ended on those dates, is presented below (the number of options represents ordinary shares exercisable in respect thereof).

No options were granted during 2025, 2024 and 2023.

The following table summarizes information as of December 31, 2025 regarding the number of ordinary shares issuable upon vested options:

The aggregate intrinsic value represents the total

pre-tax

intrinsic value, based on the Company’s closing stock price of $31.21 on December 31, 2025, less the weighted average exercise price in each range. This represents the potential amount receivable by the option holders had all option holders exercised their options as of such date. The total number of

in-the-money

options exercisable as of December 31, 2025

,

was 3.5 million.

The total intrinsic value of the options outstanding at the end of the years ended December 31, 2025 and 2024 was $42 million and $19 million respectively.

The total intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $17 million and $3 million based on the Company’s average stock price of $19.09 and $15.97 respectively.

No options were exercised during 2023.

Status of

RSUs and PSUs

The following table summarizes information about the number of RSUs and PSUs granted and outstanding:

The Company expenses compensation costs are based on the grant-date fair value. For the years ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation costs as follows:

As of December 31, 2025, the total unrecognized compensation cost before tax on RSUs and PSUs amounted to $

million. The cost is expected to be recognized over a weighted average period of approximately

2.4

years. There were

no

unrecognized compensation costs related to employee stock options.

Teva has not paid dividends on Teva ordinary shares or ADSs since December 2017.

The components of accumulated other comprehensive loss attributable to Teva are presented in the table below:

NOTE 15—Other assets impairments, restructuring and other items:

Impairments

Impairments of tangible assets for the years ended December 31, 2025, 2024 and 2023 were $769 million, $1,024 million and $28 million, respectively.

Impairments for the year ended December 31, 2025, were mainly related to a $

million impairment charge in connection with a manufacturing facility in Europe. During the fourth quarter of 2025, due to impairment indicators, the Company performed an undiscounted cash flow analysis pursuant to ASC

360-10,

Impairment and Disposal of Long-Lived Asset. Based on this analysis, the undiscounted cash flows were not sufficient to recover the carrying value of the long-lived assets related to this facility. To estimate the fair value of the asset group, the Company performed a discounted cash flow analysis using assumptions which required significant judgment, including appropriate discount rates, estimates of revenue growth rate and the amount and timing of expected future cash flows. The discount rate was based on an estimate of the WACC of market participants relative to the asset group and amounted to

8.8

%.

The forecasted cash flows were based on the Company’s most recent strategic alternatives, including contract manufacturing services partnerships and possible divestitures. The Company believes the assumptions are consistent with the plans and estimates that a market participant would use to manage the business. As a result of this analysis, an impairment charge was recorded as the fair value of the asset group was below its carrying value.

Impairments for the year ended December 31, 2024 were mainly related to the classification of the business venture in Japan and the API business (including its R&D, manufacturing and commercial activities) as held for sale (see note 2).

Impairments for the year ended December 31, 2023 were mainly related to certain assets in Europe and the United States.

In addition, as part of the Company’s efforts to further focus its business by optimizing its portfolio and global manufacturing footprint to achieve additional operational efficiencies, the Company, from time to time, evaluates strategic alternatives for certain individual assets or asset groups. These strategic alternatives may include partnerships, joint ventures, redeployment of assets or divestitures. These actions may involve substantial impairment charges in the future depending on the ultimate course of action for these long-lived assets. Any such impairment charges are recorded in the period in which there is a triggering event or commitment to a probable transaction.

Teva may record additional impairments in the future, to the extent it changes its plans on any given asset and/or the assumptions underlying such plans, as a result of its network consolidation activities and its “Pivot to Growth Strategy”.

Contingent consideration

In 2025, Teva recorded expenses of $54 million for contingent consideration, compared to expenses of $303 million in 2024 and $548 million in 2023. The expense in 2025 was mainly related to lenalidomide capsules (the generic version of Revlimid

®

) (mainly the effect of the passage of time on the net present value of the discounted payments) and to a change in the estimated future royalty payments to Eagle in connection with expected future bendamustine sales. Expenses in 2024 and 2023 were mainly related to a change in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid

®

) and a change in the estimated future royalty payments to Eagle in connection with expected future bendamustine sales.

Restructuring

In 2025, Teva recorded $225 million of

restructuring expenses

, compared to $74 million in 2024 and $111 million in 2023. Expenses in 2025 were primarily related to optimization activities in connection with Teva’s Transformation programs related to Teva’s global organization and operations, mainly through headcount reduction. Expenses in 2024 and

were primarily related to network consolidation activities.

Under Teva’s Transformation programs announced on May 7, 2025, Teva expects to achieve cost savings through a variety of initiatives including examining practices and efficiencies in methods of working, reduction in headcount and optimizing external spend in the following years. These Transformation programs are expected to result in the reduction of approximately 8% of Teva’s total work force as of December 31, 2024, by the end of 2027.

The following table provides the components of restructuring costs:

The following table provides the components of and changes in the Company’s restructuring accruals:

NOTE 16—Other income:

NOTE 17—Financial expenses, net:

NOTE 18—Earnings (loss) per share:

Basic earnings and loss per share are computed by dividing net income (loss) attributable to Teva’s ordinary shareholders by the weighted average number of ordinary shares outstanding, net of treasury shares.

Basic and diluted earnings (loss) per share attributable to Teva’s ordinary shareholders for the years ended December 31, 2025, 2024 and 2023 are calculated as follows:

In computing diluted earnings per share for the year ended December 31, 2025, basic earnings per share were adjusted to take into account the potential dilution that could occur upon the exercise of options and

RSUs and PSUs granted under employee stock compensation plans. No account was taken of the potential dilution that could occur upon the exercise of convertible senior debentures, since they had an anti-dilutive effect on earnings per share. Additionally, an amount of

27.2

million dilutive shares of ordinary shares from the conversion of outstanding stock options, RSUs and PSUs were excluded from the computation of diluted earnings per share attributable to Teva’s ordinary shareholders for the year ended December 31, 2025, as their effect would be anti-dilutive.

In computing diluted loss per share for the years ended December 31, 2024 and 2023, no account was taken of the potential dilution that could occur upon the exercise of options and

RSUs and PSUs granted under employee stock compensation plans, and convertible senior debentures, since they had an anti-dilutive effect on loss per share. Additionally, an amount of 52.1 million and

57.9

million dilutive shares of ordinary shares from the conversion of outstanding stock options, RSU’s and PSUs were excluded from the computation of diluted loss per share attributable to Teva’s ordinary shareholders for the years ended December 31, 2024 and 2023 respectively.

NOTE 19 – Segments:

Teva operates its business and reports its financial results in three segments:

In

addition to these three segments, Teva has other sources of revenues included in other activities, primarily the sale of APIs to third parties, certain contract manufacturing services and an

platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis.

Teva’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), reviews financial information prepared on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the three identified reportable segments, namely United States, Europe and International Markets, to make decisions about resources to be allocated to the segments and assess their performance.

The key areas of focus by CODM for allocation of resources are revenues from each reportable segment, as well as operating expenses (cost of sales, R&D expenses, S&M expenses, G&A expenses, and other expenses (income)). While CODM analyzes these categories, the area of focus is period over period fluxes and

budget-to-actual

variances to determine the right allocation of resources is attributed to each segment in order to ensure profitability is maximized.

Segment profit is comprised of revenues for the segment less cost of sales, R&D expenses, S&M expenses, G&A expenses and other expenses (income) related to the segment. Segment profit does not include amortization and certain other items.

Teva manages its assets on a company basis, not by segments, as many of its assets are shared or commingled. Teva’s CODM does not regularly review asset information by reportable segment and, therefore, Teva does not report asset information by reportable segment.

Teva’s CEO may review its strategy and organizational structure from time to time. Based on such review, in May 2023 Teva launched its new Pivot to Growth strategy. Any additional changes in strategy may lead to a reevaluation of the Company’s segments and goodwill allocation to reporting units, as well as fair value attributable to its reporting units. See note 7.

In conjunction with a shift in executive management responsibilities and in alignment with Teva’s Pivot to Growth strategy, Teva decided that Canada is no longer included as part of Teva’s North America segment as of January 1, 2024. From that date Canada is reported as part of the Company’s International Markets segment and Teva’s North America segment has been renamed the United States segment. Teva aligned its internal financial and segment reporting and its reporting units in accordance with this change effective January 1, 2024. Prior period amounts for the year ended December 31, 2023 have been recast to conform to the reporting structure.

On December 31, 2024, Teva classified its API business (including its R&D, manufacturing and commercial activities) as held for sale. The intention to divest is in alignment with Teva’s Pivot to Growth strategy. On November 5, 2025, Teva announced that exclusive discussions with a selected buyer on the sale have terminated. Teva has initiated a renewed sales process, maintaining its strategic intention to divest its API business. However, there can be no assurance regarding the ultimate timing or structure of a potential divestiture or whether a divestiture will be agreed or completed at all. See note 2.

To align with Teva’s Pivot to Growth strategy, commencing January 1, 2026, Anda will no longer be reported under Teva’s United States segment. This shift will allow the United States segment to continue to manage its entire product portfolio in the region, while strengthening focus on its biopharmaceutical business, growth engines and innovation. As a result, from that date, Anda will be reported as part of the Company’s Other Activities. Teva will align its internal financial and segment reporting in coordination with this shift effective January 1, 2026.

The following tables present revenues by major products and activities for each segment for the year ended December 31, 2025, 2024 and 2023:

United States segment:

Europe segment:

International Markets segment:

Revenues are attributable to countries based on sales to third parties in such countries. Revenues within the United States constituted 53% for the year ended December 31, 2025 and 49% of Teva’s consolidated revenues for both the years ended December 31, 2024 and 2023. Revenues within the Company’s country of domicile (Israel) constituted 2% of Teva’s consolidated revenues for each of the years ended December 31, 2025, 2024 and 2023.

The following table represents the percentage of consolidated third party net sales to Teva’s major customers during the years ended December 31, 2025, 2024 and 2023.

Most of Teva’s revenues from these customers were in the United States segment.

NOTE 20—Fair value measurement:

Financial items carried at fair value as of December 31, 2025 and 2024 are classified in the tables below in one of the three categories described in note 1f:

Teva determined the fair value of the liabilities for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration is based on several factors, such as: the cash flows projected from the success of unapproved product candidates; the probability of success of product candidates, including risks associated with uncertainty regarding achievement and payment of milestone events; the time and resources needed to complete the development and approval of product candidates; the life of the potential commercialized products and associated risks of obtaining regulatory approvals in the United States and Europe, and the risk adjusted discount rate for fair value measurement. The discount rate applied ranged from

8.5

% to

%.

The weighted average discount rate, calculated based on the relative fair value of Teva’s contingent consideration liabilities, was

%.

The contingent consideration is evaluated quarterly, or more frequently, if circumstances dictate. Changes in the fair value of contingent consideration are recorded in consolidated statements of income under other asset impairments, restructuring and other items. Significant changes in unobservable inputs, mainly the cash flows projected, could result in material changes to the contingent consideration liabilities. A change of the discount rate by

% would not have resulted in material changes to the contingent consideration liabilities.

The following table summarizes the activity for those financial assets and liabilities where fair value measurements are estimated utilizing Level 3 inputs.

Teva’s financial instruments consist mainly of cash and cash equivalents, investments in securities, current and

receivables, short-term credit, accounts payable and accruals, loans, senior notes and sustainability-linked senior notes, convertible senior debentures and derivatives.

The fair value of the financial instruments included in working capital approximates their carrying value. The fair value of long-term bank loans mostly approximates their carrying value, since they bear interest at rates close to the prevailing market rates.

Financial instruments not measured at fair value

Financial instruments measured on a basis other than fair value consist of senior notes, sustainability-linked senior notes and convertible senior debentures (see note 9), and are presented in the below table in terms of fair value:

NOTE 21—Long-term employee-related obligations:

As of December 31, 2025 and 2024, Teva had $112 million and $97 million, respectively, deposited in funds managed by financial institutions and earmarked by management to cover severance pay liability. Such deposits are not considered to be “plan assets” and are therefore included in other

assets.

The Company expects to expense an approximate contribution of $128 million in 2026 to pension funds and insurance companies in connection with its severance and pension pay obligations.

The main terms of the different arrangements with employees are described below.

Israel

Israeli law generally requires payment of severance pay upon dismissal of an employee or upon termination of employment in certain other circumstances. The Parent Company and its Israeli subsidiaries make ongoing deposits into employee pension plans to fund their severance liabilities. Generally, employees that joined the Company after 2005, have signed an arrangement, pursuant to which such deposits are made in lieu of the

Company’s severance liability. Therefore, no obligation is provided for in the financial statements. Severance pay liabilities with respect to employees who were employed by the Parent Company and its Israeli subsidiaries prior to that date, as well as employees who have special contractual arrangements, are provided for in the financial statements based upon the number of years of service and the latest monthly salary of such employees.

Europe

Many of the employees in the Company’s European subsidiaries are entitled to a retirement grant when they leave the Company. In the consolidated financial statements, the liability of the European subsidiaries is accrued, based on the length of service and remuneration of each employee at the balance sheet date. Other employees in Europe are entitled to a pension according to a defined benefit scheme providing benefits based on final or average pensionable pay or according to a hybrid pension scheme that provides retirement benefits on a defined benefit and a defined contribution basis. Independent certified actuaries value these schemes and determine the rates of contribution payable. Pension costs for the defined benefit section of the scheme are accounted for on the basis of charging the expected cost of providing pensions over the period during which the subsidiaries benefit from the employees’ services. The Company uses December 31 as the measurement date for defined benefit plans.

North America

The Company’s North American subsidiaries mainly provide various defined contribution plans for the benefit of their employees. Under these plans, contributions are based on specified percentages of pay. Additionally, a multi-employer plan is maintained in accordance with various union agreements.

Latin America

The majority of the employees in Latin America are entitled to severance under local law. The severance payments are calculated based on service term and employee remuneration, and accruals are maintained to reflect these amounts. In some Latin American countries, it is Teva’s practice to offer retirement health benefits to qualifying employees. Based on the specific plan requirements, benefits accruals are maintained to reflect the estimated amounts or adjusted if future plans are modified.

The Company expects to pay the following future minimum benefits to its employees: $19

million in 2026; $

million in 2027; $

; $

; $

; and $

million in the aggregate between

to

. These amounts do not include amounts that may be paid to employees who cease working with the Company before their normal retirement age.

NOTE 22—Redeemable

Non-Controlling

Interests:

In December 2024, Teva entered into an agreement with JKI Co., Ltd. (“JKI”) established by the fund managed and operated by private equity firm

J-Will

Partners Co., Ltd.

(“J-Will”),

through which JKI will acquire Teva-Takeda, Teva’s business venture in Japan (the “BV”), which includes generic products and legacy products. This transaction was completed on March 31, 2025.

Since the establishment of the BV and until the completion of the BV’s sale on March 31, 2025, Teva held 51% of the outstanding common stock of the BV, and as a result, Teva consolidated the BV in its financial statements during that period. On March 31, 2025, after the sale of the BV was completed, Teva deconsolidated the BV from its financial statements.

Pursuant to existing agreements with the minority investors of the BV, a redemption feature exists whereby the interest held by the minority investors is redeemable as a result of a sale of the BV, subject to certain terms listed therein. The redemption value would be determined based on a prescribed formula derived from the consideration received from the sale of the BV.

The balance of the redeemable

interest is reported at the greater of the initial carrying amount adjusted for the redeemable

interest’s share of earnings or losses and other comprehensive income or loss, or its estimated redemption value. The resulting changes in the estimated redemption amount (increases or decreases) are recorded with corresponding adjustments against retained earnings or, in the absence of retained earnings, additional

paid-in-capital.

Since the share redemption feature does not include a share cap, these interests are presented on the consolidated balance sheets outside of permanent equity under the caption “Redeemable

interest”.

Commensurate with the sale of the BV, Teva redeemed the remaining balance of the redeemable

interest with consideration of $38 million, following which, such balance was zero, as of March 31, 2025.

Changes in the carrying amount of the redeemable

interests for the year ended December 31, 2025 were as follows: