Net Income (Loss) Attributable to Teva
Net loss was $205 million in the first quarter of 2023, compared to net loss of $955 million in the first quarter of 2022. Net loss in the first quarter of 2022 was mainly impacted by legal settlements and loss contingencies, as discussed above.
Diluted Shares Outstanding and Earnings (Loss) per Share
The weighted average diluted shares outstanding used for the fully diluted share calculations for the three months ended March 31, 2023 and 2022 were 1,115 million and 1,107 million shares, respectively.
Diluted loss per share was $0.18 in the first quarter of 2023, compared to diluted loss per share of $0.86 in the first quarter of 2022. See note 13 to our consolidated financial statements.
Share Count for Market Capitalization
We calculate share amounts using the outstanding number of shares (i.e., excluding treasury shares) plus shares that would be outstanding upon the exercise of options and vesting of RSUs and PSUs, and the conversion of our convertible senior debentures, in each case, at period end.
As of March 31, 2023 and 2022, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,158 million and 1,145 million, respectively.
Impact of Currency Fluctuations on Results of Operations
In the first quarter of 2023, approximately 50% of our revenues were denominated in currencies other than the U.S. dollar. Because our results are reported in U.S. dollars, we are subject to significant foreign currency risks. Accordingly, changes in the rate of exchange between the U.S. dollar and the local currencies in the markets in which we operate (primarily the euro, British pound, Canadian dollar, Russian ruble, Japanese yen, Swiss franc and the new Israeli shekel) impact our results.
During the first quarter of 2023, the following main currencies relevant to our operations decreased in value against the U.S. dollar (each on a quarterly average compared to quarterly average basis): Argentinian peso by 44%, Turkish lira by 26%, Ukrainian hryvna by 22%, Japanese yen by 12%, Swedish krona by 11%, Hungarian forint by 10%, Israeli shekel by 10%, British pound by 10% and the euro by 4%. The following main currencies increased in value against the U.S. dollar: Russian ruble by 18%, Mexican peso by 10% and Brazilian real by 1%.
As a result, exchange rate movements during the first quarter of 2023, including hedging effects, negatively impacted overall revenues by $128 million and operating income by $32 million, compared to the first quarter of 2022.
In the first quarter of 2023, a negative hedging impact of $6 million was recognized under revenues, and a minimal positive impact was recognized under cost of sales. In the first quarter of 2022, a positive hedging impact of $19 million was recognized under revenues and a minimal negative impact was recognized under cost of sales.
Hedging transactions against 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. See note 8d to our consolidated financial statements.
Commencing in the third quarter of 2018, the cumulative inflation in Argentina exceeded 100% or more over a three-year period. Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations.
Commencing in the second quarter of 2022, the cumulative inflation in Turkey exceeded 100% or more over a three-year period. Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations.
Liquidity and Capital Resources
Total balance sheet assets were $43,456 million as of March 31, 2023, compared to $44,006 million as of December 31, 2022.
Our working capital balance, which includes accounts receivables net of SR&A, inventories, prepaid expenses and other current assets, accounts payables, employee-related obligations, accrued expenses and other current liabilities, was negative $41 million as of March 31, 2023, compared to negative $119 million as of December 31, 2022. This increase was mainly due to an increase in accounts receivables, net of SR&A, as well as in inventory levels and prepaid expenses, and a decrease in employee-related obligations, partially offset by an increase in accounts payables and provisions for legal settlements and loss contingencies.
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