v3.26.1
Derivative instruments and hedging activities
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities
NOTE 8 – Derivative instruments and hedging activities:
 
a.
Foreign exchange risk management:
In the first
six
months of
2026
, approximately
47
% of Teva’s revenues were denominated in currencies other than the U.S. dollar. As a result, Teva is subject to significant foreign currency risks.
The Company enters into forward exchange contracts and purchases and writes options in order to hedge the currency exposure on balance sheet items, revenues and expenses. In addition, the Company takes measures to reduce its exposure by using natural hedging. The Company also acts to offset risks in opposite directions among the subsidiaries within Teva. The currency hedged items are usually denominated in the following main currencies: euro, Swiss franc, British pound, Russian ruble, Canadian dollar, Polish złoty, Japanese yen, new Israeli shekel and Indian rupee. Depending on market conditions, foreign currency risk is also managed through the use of foreign currency debt.
The Company may choose to hedge against possible fluctuations in foreign subsidiaries net assets (“net investment hedge”) and has entered into cross-currency swaps and forward-contracts in the past in order to hedge such an exposure.
Most of the counterparties to the derivatives are major banks and the Company is monitoring the associated inherent credit risks. The Company enters into derivative transactions for hedging purposes only.
 
b.
Interest risk management:
The Company raises capital through various debt instruments, including senior notes, sustainability-linked senior notes, bank loans and convertible debentures that bear fixed or variable interest rates, as well as a syndicated sustainability-linked revolving credit facility and securitization programs that bear a variable interest rate. In some cases, the Company has swapped from a fixed to a variable interest rate (“fair value hedge”) and from a fixed to a fixed interest rate with an exchange from a currency other than the functional currency (“cash flow hedge”), thereby reducing overall interest expenses or hedging risks associated with interest rate fluctuations. As of June 30, 2026, all outstanding senior notes and sustainability-linked senior notes bear a fixed interest rate.
 
c.
Derivative instruments outstanding:
The following table summarizes the classification and fair values of derivative instruments:
 
 
  
Fair value
 
  
Fair value
 
 
  
Designated as hedging
instruments
 
  
Not designated as hedging
instruments
 
 
  
June 30,

2026
 
  
December 31,

2025
 
  
June 30,

2026
 
  
December 31,

2025
 
Reported under
  
(U.S. $ in millions)
 
  
(U.S. $ in millions)
 
Asset derivatives:
            
Other current assets:
            
Option and forward contracts
    $ —       $ —       $ 99      $ 86  
Liability derivatives:
            
Other current liabilities:
            
Option and forward contracts
      —         —         (60 )       (38 ) 
Other
non-current
liabilities:
            
Cross-currency interest rate swap-cash flow hedge (1)
      (20 )       (19 )       —         —   
The table below provides information regarding the location and amount of
pre-tax
(gains) losses from derivatives designated in cash flow hedging relationships:
 
 
  
Financial expenses,
net
 
  
Other
comprehensive
income (loss)
 
 
  
Three months
ended,
 
  
Three months
ended,
 
 
  
June 30,

2026
 
  
June 30,
2025
 
  
June 30,

2026
 
  
June 30,
2025
 
Reported under
  
(U.S. $ in millions)
 
Line items in which effects of hedges are recorded
    $ 224      $ 252      $ 47      $ 244  
Cross-currency interest rate swap - cash flow hedge (1)
      (9 )       17        7        1  
 
 
 
 
 
 
 
    
Financial expenses,
net
     
Other
comprehensive
income (loss)
  
    
Six months ended,
     
Six months ended,
  
    
June 30,

2026
     
June 30,
2025
     
June 30,

2026
     
June 30,
2025
  
Reported under
   
(U.S. $ in millions)
  
Line items in which effects of hedges are recorded
    $ 440      $ 477      $ (74 )     $ 744  
Cross-currency interest rate swap - cash flow hedge (1)
      (19 )       17        8        1  
 
The table below provides information regarding the location and amount of
pre-tax
(gains) losses from derivatives not designated as hedging instruments:
 
 
  
Financial expenses, net
 
  
Net revenues
 
 
  
Three months ended,
 
  
Three months ended,
 
 
  
June 30,

2026
 
  
June 30,
2025
 
  
June 30,
2026
 
  
June 30,
2025
 
Reported under
  
(U.S. $ in millions)
 
Line items in which effects of hedges are recorded
    $ 224     $ 252     $ (4,142 )    $ (4,176 ) 
Option and forward contracts (2)
      (31 )      (58 )      —        —   
Option and forward contracts economic hedge (3)
      —        —        8       32  
    
Financial expenses, net
    
Net revenues
  
    
Six months ended,
    
Six months ended,
  
    
June 30,

2026
    
June 30,
2025
    
June 30,
2026
    
June 30,
2025
  
Reported under
   
(U.S. $ in millions)
  
Line items in which effects of hedges are recorded
    $ 440     $ 477     $ (8,124 )    $ (8,067 ) 
Option and forward contracts (2)
      (19 )      4       —        —   
Option and forward contracts economic hedge (3)
      —        —        (3 )      60  
 
(1)
In May 2025, Teva entered into a $500 million notional amount of fixed to fixed cross-currency interest rate swaps relating to its 5.75% senior notes due 2030 to hedge the foreign currency exchange risk of future principal and interest payments associated with the USD denominated notes. The cross-currency swaps synthetically convert part of the USD debt into CHF, aligning debt servicing costs with Teva’s inflows and reducing economic volatility. These swaps have been designated as cash flow hedges and the gain or loss on these swaps will be reported as a component of other comprehensive income and reclassified into earnings in each period during which the swaps affect earnings in the same line item associated with the USD denominated bonds.
(2)
Teva uses foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, Teva recognizes gains or losses that offset the revaluation of the balance sheet items also recorded under financial expenses, net.
(3)
Teva entered into option and forward contracts designed to limit the exposure of foreign exchange fluctuations on projected revenues and expenses recorded in euro, Swiss franc, British pound, Russian ruble, Canadian dollar, Polish złoty, new Israeli shekel, Indian rupee and some other currencies to protect its projected operating results in 2026. These derivative instruments do not meet the criteria for hedge accounting, however, they are accounted for as an economic hedge. These derivative instruments, which may include hedging transactions of future projected revenues and expenses, are recognized on the balance sheet at their fair value on a quarterly basis, while the foreign exchange impact on the underlying revenues and expenses may occur in subsequent quarters. Changes in the fair value of the derivative instruments are recognized in the same line item in the statements of income as the underlying exposure being hedged. Cash flows associated with these derivatives are reflected as cash flows from operating activities in the consolidated statements of cash flows.

d.
Amortizations due to terminated derivative instruments:
Forward-starting interest rate swaps and treasury lock agreements
In 20
15, Teva entered into forward-starting interest rate swaps and treasury lock agreements to protect the Company from interest rate fluctuations in connection with a future debt issuance the Company was planning. These forward-starting interest rate swaps and treasury lock agreements were terminated in July 2016 upon the debt issuance. Termination of these transactions resulted in a loss position of $493 million, which was recorded as other comprehensive income (loss) and is amortized under financial expenses, net over the life of the debt.
With respect to these forward-starting interest rate swaps and treasury lock agreements, losses of $5 million and $17 million were recognized under financial expenses, net, for
 the
three months ended June 30, 2026 and 2025, and losses of $10 million and $24 million were recognized under financial expenses, net for each of the six months ended June 30, 202
6
and 202
5
, respectively.
 
e.
Securitization:
U.S. securitization program
On November 7, 2022, Teva and a bankruptcy-remote special purpose vehicle (“SPV”) entered into an accounts receivable securitization facility (“AR Facility”) with PNC Bank, National Association (“PNC”) with a
three-year term
. The AR Facility initially provided for purchases of accounts receivable by PNC in an amount of up to $
1
 billion was later adjusted through amendments to reflect changes in receivables purchaser participation and commitment amounts totaling up to $
950
 million. In November 2025, the AR facility was extended for an additional three-year term. The commitment amount remained $
950
 million.
The outstanding amount of receivables sold to the receivables purchasers and derecognized by the SPV, as of June 30, 2026 and December 31, 2025, was $854 million and $794 million, respectively. In addition to the accounts receivables sold, as of June 30, 2026 and December 31, 2025, an amount of $594 million and $799 million of the SPV’s accounts receivables was pledged by the SPV as a seller guarantee, and is included under “Accounts receivables, net,” in the Consolidated Balance Sheet.
 
f.
Supplier Finance Program Obligation
Teva maintains supply chain finance agreements with participating financial institutions. Under these agreements, participating suppliers may voluntarily elect to sell their accounts receivable with Teva to these financial institutions. Teva’s suppliers negotiate their financing agreements directly with the respective financial institutions and Teva is not a party to these agreements. Teva has no economic interest in its suppliers’ decisions to participate in the program and Teva pays the financial institutions the stated amount of confirmed invoices on the maturity dates, which is generally within 120 days from the date the invoice was received.
The agreements with the financial institutions do not require Teva to provide assets pledged as security or other forms of guarantees for the supplier finance programs. Substantially all outstanding amounts related to suppliers participating in the supplier finance program are recorded under accounts payables in Teva’s consolidated balance sheets. As of June 30, 2026 and December 31, 2025, the outstanding
accounts payables to suppliers
participating in these supplier finance programs were $257 million and $225 million,
respectively
.