Teva Pharmaceutical Industries Limited (TEVA) Cash Flow Statement

The OCF/NI ratio is highly erratic, ranging from -2.65 in 2024Q4 to 2.41 in 2025Q4, reflecting that net income is frequently distorted by non-cash items and one-time charges. In 2026Q2, a net loss of -$576M was accompanied by positive operating cash flow of $722M, suggesting that cash generation is not directly tied to reported profitability. Investors should monitor whether this divergence stems from sustainable operational factors or transient working capital movements.

FCF margins have ranged from -6.5% in 2024Q1 to 21.6% in 2025Q4, with the most recent quarter at 17.4%, suggesting that the company can generate substantial cash when working capital dynamics are favorable. However, the negative FCF in 2026Q1 and 2025Q1 indicates that seasonal or operational factors can quickly reverse cash generation. The trajectory appears to be stabilizing at a higher level than 2024, but the volatility warrants caution.

The magnitude of working capital changes often exceeds quarterly net income, indicating that Teva's cash flow is highly sensitive to inventory, receivables, and payables management. For instance, 2026Q1 saw a -$617M working capital outflow that drove operating cash flow negative, while 2026Q2's +$311M inflow contributed to the positive cash flow. This pattern suggests that Teva may be managing cash through timing of payments and collections, which could mask underlying operational trends.

CapEx has averaged around $127M per quarter, which is modest relative to revenue, suggesting that Teva is not investing heavily in growth or new capacity. This restraint may be a deliberate effort to preserve cash for debt reduction or legal settlements, but it could also limit future competitiveness. The low capital intensity implies that depreciation charges are not being fully replaced, which may eventually require higher investment.

The absence of shareholder returns is notable for a company of Teva's size, and it suggests that management is prioritizing balance sheet repair over returning capital. Acquisition-related cash outflows have been minimal, with the largest being $42M in 2026Q1, implying a conservative M&A approach. This capital deployment pattern is consistent with a company still managing a heavy debt load and legal liabilities.

The large positive gap between operating cash flow and net income suggests that non-cash charges, such as depreciation and amortization, and working capital inflows are boosting cash flow despite reported losses. This divergence may indicate that the company's underlying cash-generating ability is healthier than its income statement suggests, but it also raises questions about the sustainability of these adjustments. Investors should assess whether the gap is driven by one-time items or recurring operational efficiencies.