What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-02-23 · 175 added, 189 removed, 903 unchanged (29% of the section changed)

34 unchanged sentences

As described in Note 2 to the consolidated financial statements, the transaction price is determined based on the consideration to which the Company will be entitled to in exchange for providing Optune solution.

The company provides certain patients with implicit price concessions, which results in variable consideration.

According to historical records, the Company expects to receive, in aggregate for a given portfolio, less than the gross revenue net of explicit discounts.

The company provides certain patients with implicit price concessions, which results in variable consideration.The Company adjusts the transaction price for estimated implicit price concessions to reflect the revenues which the Company expects to receive.

Auditing the Company's measurement of variable consideration involved challenging judgment because the calculation involves uncertainty and subjective management assumptions about estimates of expected price concessions.

2 unchanged sentences

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company's process to calculate variable consideration, including the underlying assumptions about estimates of expected price concessions.

Our audit procedures included, among others, evaluating the methodology used, analyzing the significant assumptions discussed above, and testing the accuracy and completeness of the underlying data used in management's calculation.

Our audit procedures included, among others, evaluating the methodology used, analyzing the significant assumptions, and testing the accuracy and completeness of the underlying data used in management's calculation.

This included testing inputs of the calculation by reconciliation of the data between the various information systems, performing independent recalculation of the Company's estimate and evaluating the historical accuracy of management's estimates by comparing such estimates to subsequent actual results.

94 unchanged sentences

Net income (loss) $ ( 207,043 ) $ ( 92,534 ) $ ( 58,351 )

Basic net income (loss) per ordinary share $ ( 0.88 ) $ ( 0.56 ) $ 0.20

Weighted average number of ordinary shares used in computing

basic net income (loss) per share 104,660,476 103,433,274 100,930,866

Diluted net income (loss) per ordinary share $ ( 0.88 ) $ ( 0.56 ) $ 0.18

Weighted average number of ordinary shares used in computing

diluted net income (loss) per share 104,660,476 103,433,274 108,877,648

Basic and diluted net income (loss) per ordinary share $ ( 1.95 ) $ ( 0.88 ) $ ( 0.56 )

Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 106,391,178 104,660,476 103,433,274

The accompanying notes are an integral part of the consolidated financial statements.

21 unchanged sentences

Issuance of shares in connection with employee stock purchase plan 51,370 4,546 — — 4,546

Conversion feature of convertible note, net — 132,474 — — 132,474

Cumulative effect adjustment resulting from ASU 2020-06 early adoption (see Note 2(y)) — ( 132,474 ) — 3,502 ( 128,972 )

Other comprehensive income (loss) net of tax expense of $ 0

5 unchanged sentences

Issuance of shares in connection with employee stock purchase plan 86,264 5,224 — — 5,224

Cumulative effect adjustment resulting from ASU 2020-06 early adoption (see Note 2(y)) — ( 132,474 ) — 3,502 ( 128,972 )

Other comprehensive income (loss) net of tax expense of $ 0

22 unchanged sentences

Foreign currency remeasurement loss (gain) 161 ( 3,256 ) 3,231

Decrease (increase) in accounts receivables 2,547 5,270 ( 30,354 )

Decrease (increase) in accounts receivables and prepaid expenses

29,414 2,547 5,270

Amortization of discount (premium) ( 23,084 ) ( 1,536 ) 3,101

16 unchanged sentences

Proceeds from issuance of shares, net $ 4,416 $ 5,224 $ 4,546

Proceeds from convertible note, net — — 558,439

Repayment of long-term debt ( 10 ) ( 28 ) ( 26 )

9 unchanged sentences

Interest paid $ 6 $ 41 $ 101

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents $ 240,821 $ 115,326 $ 208,802

Restricted cash $ 1,743 $ 508 $ 807

Total cash, cash equivalents and restricted cash $ 242,564 $ 115,834 $ 209,609

Non-cash activities:

Right-of-use assets obtained in exchange for lease liabilities $ 18,063 $ 12,117 $ 5,387

Purchase of property incurred but unpaid at period end

$ 1,714 $ — $ —

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

dollars in thousands (except share and per share data)

NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers.

The Company currently markets Optune in the United States ("U.S."), Germany, Japan and certain other countries.

The Company currently markets Optune Lua in the U.S.

and European Union.

NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") devices, including Optune Gio and Optune Lua (collectively, its "Products"), for the treatment of solid tumor cancers.

The Company currently markets its Products in the United States ("U.S."), Germany, Japan and certain other countries.

The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd.

("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China").

("Zai") to market the Company's Products in China, Hong Kong, Macau and Taiwan ("Greater China").

During the year ended December 31, 2019, the Company implemented changes to its corporate entity operating structure, including transferring certain intellectual property to its Swiss subsidiary, primarily to align corporate entities with the Company’s evolving operations and business model.

As of January 1, 2022, the effective place of daily management and control of the Company moved to Switzerland and the Company has become a Swiss tax resident.

In November 2023, the Company announced a series of actions to strengthen and optimize its business operations to support near-term growth drivers and long-term value creation.

The plan included a reduction in headcount of approximately 200 employees or 13 % of the Company's then current workforce.

The Company expects to incur total one-time costs related to the workforce reduction of approximately $ 7,000 across the fourth quarter of 2023 and the first quarter of 2024.

Restructuring costs (including severance pay, garden leave payments, etc.) in the amount of $ 6,231 were included in the financial statements for the year ended December 31, 2023, of which $ 262 are attributable to Cost of Goods Sold, $ 2,070 to Research and Development, $ 2,404 to Sales and Marketing and $ 1,495 to General and Administrative expenses.

Of these amounts, $ 2,753 have been paid in 2023.

The $ 6,231 is offset by forfeited equity-based compensation expense and accrual reversals in the amount of $ 9,313 and $ 3,041 , respectively, which relate to the terminated employees' exits from the Company’s equity and cash incentive plans.

Basis of presentation and significant accounting policies

3 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, deferred taxes, tax liabilities, useful-life of field equipment, right-of-use assets and lease liabilities, convertible notes, pension liabilities, revenue recognition, accrued expenses and share-based compensation costs.

The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, deferred taxes, tax liabilities, useful-life of field equipment, right-of-use assets and lease liabilities, convertible notes, pension liabilities, revenue, accrued expenses and share-based compensation costs.

The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made.

13 unchanged sentences

dollar are re-measured into dollars in accordance with Accounting Standards Codification (ASC) No.

830-10, "Foreign Currency Matters." All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statements of operations as financial income or expenses, as applicable.

For a subsidiary whose functional currency has been determined to be its local currency, assets and liabilities are translated at year-end exchange rates and statement of operations items are translated at average exchange rates prevailing during the year.

Such translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) in shareholders' equity.

830-10, "Foreign Currency Matters." All transaction gains and losses of the re-

NovoCure Limited and subsidiaries

1 unchanged sentence

dollars in thousands (except share and per share data)

measurement of monetary balance sheet items are reflected in the consolidated statements of operations as financial income or expenses, as applicable.

Such translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) in shareholders' equity.

Principles of consolidation:

5 unchanged sentences

The Company accounts for investments in debt securities in accordance with ASC 320, "Investments—Debt and Equity Securities." Management determines the appropriate classification of its investments in marketable debt securities at the time of purchase and reevaluates such determinations at each balance sheet date.

Investments in marketable debt securities can be classified as available-for-sale ("AFS") and held-to-maturity ("HTM") when the Company has the intent and ability to hold the securities to maturity.

As of December 31, 2022 and 2021, all securities are classified as held-to-maturity since the Company has the intent and ability to hold the securities to maturity and, accordingly, debt securities are stated at amortized cost.

Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity.

Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold.

Realized gains and losses on sale of investments are included in financial (expenses) income, net and are derived using the specific identification method for determining the cost of securities sold.

The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity.

Such amortization together with interest on securities is included in financial income, net.

Such amortization together with interest on securities is included in financial (expenses) income, net.

Each reporting period, the Company evaluates whether declines in fair value below amortized cost are due to expected credit losses, as well as the Company’s ability and intent to hold the investment until a forecasted recovery occurs.

Allowance for credit losses on available-for-sale debt securities are recognized in the Company’s consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity.

Allowance for credit losses on available-for-sale debt securities are recognized in the Company’s consolidated statements of operation, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders’ equity.

Held-to-maturity debt securities are stated at amortized cost of which is adjusted for amortization of premiums and accretion of discounts to maturity and any credit losses.

Such amortization, interest or credit losses are included in the consolidated statement of operations as financial income or expenses, as appropriate.

As of December 31, 2023 and 2022, all securities are classified as held-to-maturity since the Company has the intent and ability to hold the securities to maturity and, accordingly, debt securities are stated at amortized cost.

For the years ended December 31, 2023, 2022 and 2021, no credit losses have been identified.

3 unchanged sentences

Trade receivables:

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

The Company’s trade receivables balance contains billed and unbilled commercial activities.

5 unchanged sentences

The Company regularly evaluates its ability to realize the value of inventory.

If the inventories are deemed

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

damaged, if actual demand for the Company’s devices deteriorates, or if market conditions are less favorable than those projected, inventory write-offs may be required.

If the inventories are deemed damaged, if actual demand for the Company’s devices deteriorates, or if market conditions are less favorable than those projected, inventory write-offs may be required.

Inventory write-offs of $ 681 , $ 917 and $ 1,045 , respectively, were recorded for the years ended December 31, 2023, 2022 and 2021.

27 unchanged sentences

The Company uses the portfolio approach to apply the standard to portfolios of contracts with similar characteristics.

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

To recognize revenue under ASC 606, the Company applies the following five steps:

2 unchanged sentences

The evidence of a contract generally consists of a prescription, a patient service agreement and the verification of the assigned payer for the contract and intention to collect.

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

Identify the performance obligations in the contract.

7 unchanged sentences

To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration.

Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

In determining the transaction price, the Company includes variable consideration if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

The Company reassesses variable consideration at each reporting period and, if necessary, these estimates are adjusted to reflect the anticipated amounts to be collected when those facts and circumstances become known.

The Company has agreements with many payers that define explicit discounts off the gross transaction price.

In addition to the explicit discounts negotiated with each payer, the Company expects to receive, in aggregate for a given portfolio, less than the gross revenue net of explicit discounts.

ASC 606 requires that the Company recognize this variable consideration as an implicit discount in the billing period.

ASC 606 requires that the Company recognize this variable consideration as an implicit discount at the time the goods or services are provided.

The implicit discount includes both an estimate of claims that will pay at an amount less than billed and an estimate of claims that will not pay within a given time horizon.

The implicit discount adjustments to the transaction price are due to concessions, not collectability concerns driven by payer credit risk.

The estimation of implicit discount adjustments to the transaction price are based on historical price concession experience within payors and expected future concession.

If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenue in the period such adjustments become known.

Allocate the transaction price to performance obligations in the contract.

7 unchanged sentences

For more information, see Note 2(x).

The Company elected the short-term contract exemption for the remaining transaction price disclosures, as the Company's contracts have an original expected duration of less than one year.

Revenues are presented net of indirect taxes.

The Company has elected to apply the practical expedient for financing component for transactions in which the difference between the payment date and the revenue recognition timing is up to 12 months.

Payment terms between the Company and its payors are typically up to twelve months, and vary by the type of payer, country of sale and the products or services offered.

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

Net revenues in the years ended December 31, 2023, 2022 and 2021 also include amounts recognized pursuant to the Zai Agreement.

10 unchanged sentences

The Company accounts for share-based compensation in accordance with ASC 718, "Compensation—Stock Compensation." ASC 718 requires companies to estimate the fair value of share-based compensation awards on the date of grant using an option-pricing model.

The value of the award is recognized as an expense over the

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

requisite service periods in the Company’s consolidated statements of operations.

The value of the award is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.

The Company's policy is to account for forfeitures as they occur.

The Company recognizes compensation costs for the value of awards granted using the accelerated method over the requisite service period of the award, which for restricted share units is two or three years and and for option awards, which is two or four years .

The Company recognizes compensation costs for the value of performance stock units ("PSU") over the performance period when the vesting conditions become probable in accordance with ASC 718.

13 unchanged sentences

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market.

6 unchanged sentences

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the instrument is categorized as Level 3.

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

Basic and diluted net loss per share:

15 unchanged sentences

Retirement, pension and severance plans:

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

The Company has a 401(k) retirement savings plan for its U.S.

14 unchanged sentences

According to Section 14 of Israel Severance Pay Law, the Company makes deposits on behalf of its employees with respect to the Company’s severance liability and therefore no obligation is provided for in the financial statements.

Severance pay liabilities with respect to employees who are not subject to Section 14, are provided for in the financial statements based upon the number of years of service and the latest monthly salary and

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

the related deposits are recorded as an asset based on the cash surrender value.

Contributions pursuant to these obligations for the years ended December 31, 2023, 2022 and 2021 amounted to $ 1,735 , $ 1,594 and $ 1,466 , respectively.

5 unchanged sentences

Comprehensive income (loss) generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders.

The accumulated other comprehensive income (loss), net of taxes, relates to a pension liability, unrealized loss from debt securities and foreign currency translation adjustments.

The accumulated other comprehensive income (loss), net of taxes, relates to a pension liability, unrealized gain (loss) from debt securities and foreign currency translation adjustments.

Lessee accounting:

4 unchanged sentences

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make minimum lease payments arising from the lease.

ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs incurred.

ROU assets are initially measured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

The ROU assets are reviewed for impairment.

7 unchanged sentences

Lessor accounting - Operating leases:

ASC 842 provides lessors with an optional practical expedient, by class of underlying asset, not to separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (ASC 606) and both of the following criteria are met:

ASC 842 provides lessors with an optional practical expedient, by class of underlying asset, not to separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the revenue guidance (ASC 606) and both of the following criteria are met:

The timing and pattern of transfer of the lease component and the non-lease component(s) are the same;

1 unchanged sentence

The Company's product supply agreements include the right to use the device (lease component), the supply obligation of disposable arrays and technical support for the term of treatment (non-lease component).

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

If the lease component is the predominant component, the Company accounts for all revenues under such lease as a single component in accordance with the new lease accounting standard.

If the lease component is the predominant component, the Company accounts for all revenues under such lease as a single component in accordance with the lease accounting standard.

Conversely, if the non-lease component is the predominant component, all revenues under such lease are accounted for in accordance with the revenue recognition accounting standard.

13 unchanged sentences

Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument.

Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification ("ASC Topic 815"), Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium.

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

substantial premium.

Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard.

1 unchanged sentence

The Company early adopted ASU 2020-06, effective January 1, 2021 on a modified retrospective basis.

Commencing January 1, 2021, the Company early adopted ASU 2020-06 .

The impact of the Company’s adoption of ASU 2020-06 on the balance sheet as of January 1, 2021 was an increase in long term debt, net of $ 128,972 , a decrease in additional paid-in capital of $ 132,474 , and a decrease in accumulated deficit of $ 3,502 .

1 unchanged sentence

For additional information see Note 10 of these audited consolidated financial statements.

Recently Issued Accounting Pronouncements:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-09.

Cash and Cash equivalents and Short-term investments

22 unchanged sentences

Treasury bills Level 1 188,030 8 ( 540 ) 187,498 188,030 — 188,030

Government and governmental agencies Level 2 44,357 12 ( 12 ) 44,357 44,357 44,357

Corporate debt securities Level 2 304,766 1,066 ( 587 ) 305,245 304,766 — 304,766

1 unchanged sentence

$ 969,425 $ 1,086 $ ( 1,139 ) $ 969,372 $ 969,425 $ 115,326 $ 854,099

(1) Changes in fair value of HTM securities are presented for disclosure purposes as required by ASC 320 and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

(1) Changes in fair value of held-to-maturity ("HTM") securities are presented for disclosure purposes as required by ASC 320 "Investments — Debt Securities" and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

(2) Pursuant to a bank guaranty, $ 16,650 of short-term investments are pledged.

In November 2022, the Company transferred all of its AFS portfolio to HTM as part of the Company's investment strategy.

1 unchanged sentence

These securities continue to be reported in accumulated comprehensive income (loss) and are amortized over the remaining lives of the securities as an adjustment to the yield.

As of December 31, 2022, the unamortized unrealized loss balance was $ 445 and is reported in accumulated other comprehensive income (loss).

In accordance with ASC No.

820, the Company measures its money market funds and marketable securities at fair value.

Money market funds and marketable securities are classified within Level 1 or Level 2.

This is because these

As of December 31, 2023 and 2022, the balance was fully amortized and $ 445 , respectively.

NovoCure Limited and subsidiaries

1 unchanged sentence

dollars in thousands (except share and per share data)

assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

In accordance with ASC No.

820, the Company measures its money market funds at fair value.

The fair value of the money market funds and HTM securities, which is presented for disclosure purposes, is classified within Level 1 or Level 2.

This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

As of December 31, 2023 and 2022, all investments and equivalents mature in one year or less.

1 unchanged sentence

The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.

Debt securities with continuous unrealized losses for less than 12 months and their related fair values were as follows:

December 31, 2022

Less than 12 months

Fair value Unrealized loss

Treasury bills 162,813 ( 540 )

Government and governmental agencies 38,477 ( 12 )

Corporate debt securities 162,085 ( 587 )

Total $ 363,375 $ ( 1,139 )

As of December 31, 2022, no continuous unrealized losses for 12 months or greater was identified.

Receivables and prepaid expenses

150 unchanged sentences

The Notes are therefore not convertible as of December 31, 2023 and are classified as long-term liability.

The net carrying amount of the liability and equity components of the Convertible Notes (see note 2(z) for additional information) as of December 31, 2022 and 2021 are as follows:

The net carrying amount of the liability of the Convertible Notes (see note 2(y) for additional information) as of December 31, 2023 and 2022 are as follows:

Liability component, net:

7 unchanged sentences

carrying amount of liability component of the Notes as of December 31, 2023 and 2022 were $ 515,962 and $ 455,091 , respectively.

Finance expense related to the Notes were as follows:

Year ended December 31,

2022 2021 2020

Amortization of debt issuance costs

$ 3,293 $ 3,339 $ 333

Amortization of debt discount

$ — $ — $ 3,605

Total finance expense recognized

$ 3,293 $ 3,339 $ 3,938

Loan and Security Agreement

On February 7, 2018, the Company and certain of its subsidiaries entered into a Loan and Security Agreement ("2018 Loan Agreement") with BioPharma Credit PLC pursuant to which such lender made a term loan to the Company in the principal amount of $ 150,000 (the "2018 Credit Facility").

The term loan, which was drawn in full upon execution of the 2018 Loan Agreement, bore interest at 9.0 % per annum, payable quarterly in arrears.

On August 18, 2020, the Company terminated the 2018 Credit Facility.

The prepayment included $ 150,000 in principal repayment and $ 3,000 in prepayment premium, plus accrued and unpaid interest and expenses payable through the payoff date.

The un-amortized issuance costs in the amount of $ 478 that were fully amortized upon the repayment and the prepayment premium were reported in the Company’s finance expenses.

The net carrying amount of the liability is represented by the principal amount of the Notes, less total issuance costs plus any amortization of issuance costs.

The total issuance costs upon issuance of the Notes were $ 16,561 and are amortized to interest expense using the effective interest rate method over the contractual term of the Notes.

Interest expense is recognized at an annual effective interest rate of 0.59 % over the contractual term of the Notes.

Amortization of debt issuance costs, included in finance expenses, for the years ended December 31, 2023, 2022 and 2021 was $ 3,313 , $ 3,293 , and $ 3,339 , respectively.

2020 Credit Facility

On November 6, 2020, the Company entered into a three-year $ 150.0 million senior secured revolving credit facility with a syndicate of relationship banks (the "2020 Credit Facility").

On February 17, 2023, the Company gave irrevocable notice to the administrative agent under the 2020 Credit Facility that the Company terminated all commitments, effective February 22, 2023.

This effectively terminated the 2020 Credit Facility, as the Company's ability to borrow and the Company's obligations to comply with all covenants ended on such date.

The liens and guaranties in favor of the lenders are released.

There were no early termination fees payable and as of February 22, 2023 the Company had no outstanding balance borrowed under the 2020 Credit Facility.

On November 6, 2023, the 2020 Credit Facility expired pursuant to its terms.

As of December 31, 2023, the Company had no outstanding balance borrowed or any other liability outstanding under the 2020 Credit Facility.

Other long-term liabilities

10 unchanged sentences

Future minimum lease payments:

Thereafter 9,039

NovoCure Limited and subsidiaries

1 unchanged sentence

dollars in thousands (except share and per share data)

Thereafter 5,089

Total future minimum lease payments $ 42,339

10 unchanged sentences

As of December 31, 2023 and 2022 the Company pledged bank deposits of $ 2,848 and $ 2,296 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained guarantees by the bank for the fulfillment of the Company’s lease commitments of $ 3,216 and $ 2,459 , respectively.

Senior secured revolving credit facility

On November 6, 2020, the Company entered into a new three-year $ 150,000 senior secured revolving credit facility with a syndicate of relationship banks (the "Credit Facility").

The Company may, subject to certain conditions and limitations, increase the revolving credit commitments outstanding under the revolving credit facility or incur new incremental term loans in aggregate principal amount not to exceed $ 250.0 million in total.

The commitments under the Credit Facility are guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Company's and certain of the Company's subsidiaries’ assets.

Outstanding loans will bear interest per annum at a sliding scale based on the Company's secured leverage ratio from 2.75 % to 3.25 % above the applicable interbank borrowing reference rate for the currency in which the loan is denominated.

Additionally, the facility contains a fee for the unused revolving credit commitments at a sliding scale based on the Company's secured leverage ratio from 0.35 % to 0.45 %.

The Credit Facility contains financial covenants requiring maintenance of a minimum fixed charge coverage ratio and specifying a maximum senior secured net leverage ratio, as well as customary events of default which include a change of control.

As of December 31, 2022, the Company had no outstanding balance borrowed under the Credit Facility.

On February 17, 2023, the Company gave irrevocable notice to the administrative agent under the Credit Facility that the Company terminated all commitments, effective February 22, 2023.

This effectively terminated the Credit Facility, as the Company's ability to borrow and the Company's obligations to comply with all covenants ended on such date.

The liens and guaranties in favor of the lenders are released.

There was no early termination fee payable and as of February 22, 2023 the Company had no outstanding balance borrowed under the Credit Facility.

In addition, € 15,000 ($ 16,650 ) of the Company's short term investments are pledged to a bank as guarantee for the Company's due execution of cash concentration agreements.

Zai License and Collaboration Agreement

On September 10, 2018, the Company entered into the Zai Agreement.

Under the Zai Agreement, the Company granted Zai exclusive rights to commercialize Optune in the field of oncology in China, Hong Kong, Macau and

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

Taiwan ("Greater China").

The Zai Agreement also established a development partnership for Optune in multiple solid tumor indications.

Under the Zai Agreement, the Company granted Zai exclusive rights to commercialize the Company's Products in the field of oncology in China, Hong Kong, Macau and Taiwan ("Greater China").

The Zai Agreement also established a development partnership for the Company's Products in multiple solid tumor indications.

In partial consideration for the license grant to Zai for Greater China, the Company was entitled to a non-refundable, up-front license fee in the amount of $ 15,000 (the "License Fee").

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Zai is purchasing licensed products for commercial use exclusively from the Company at the Company’s fully burdened manufacturing cost.

The Company recognizes revenue pursuant to the License Agreement with Zai in accordance with ASC 606, "Revenue Recognition from Customers." The License Fee is deferred and recognized over related six year performance period commencing September 10, 2018 ("Zai Performance Period").

Revenue from commercial milestone payments will be recognized upon the achievement of such milestones and future clinical or regulatory milestone payments will be recognized in a straight line over the applicable performance period, in accordance with ASC 606.

Revenue from royalty payments are recognized in accordance with ASC 606 in the period accrued.

Revenues from sales of product or rendering services are recognized upon shipping the products or rendering the services and satisfying the performance obligation.

During the year ended December 31, 2020, the Company triggered an aggregate $ 10,000 of milestone payments, which, with the License Fee, are deferred and recognized over the remainder of the Zai Performance Period ending in September 2024 on a straight-line basis, resulting in revenue of $ 4,389 $ 6,308 and $ 3,981 for the years ended December 31, 2022, 2021 and 2020, respectively.

Legal Proceedings

In June 2023, a putative class action lawsuit was filed against the Company, its Executive Chairman and its Chief Executive Officer.

The complaint, later amended to add our Chief Financial Officer as a defendant, purports to be brought on behalf of a class of persons and/or entities who purchased or otherwise acquired ordinary shares of the Company from January 5, 2023 through June 5, 2023, and alleges material misstatements and/or omissions in the Company’s public statements with respect to the results from its phase 3 LUNAR clinical trial.

The Company believes that the action is without merit and plans to defend the lawsuit vigorously.

As of December 31, 2023, the Company has not accrued any amounts in respect of this claim, as it believes liability is not probable and the amount of any potential liability cannot be reasonably estimated.

Purchase Obligations

As of December 31, 2023, the Company has $ 43,075 in purchase obligations with certain of its suppliers.

NovoCure Limited and subsidiaries

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dollars in thousands (except share and per share data)

Revenue recognition

The Company’s net revenues by geographic region, based on the patient’s location are summarized as follows:

Year ended December 31,

2023 2022 2021

United States $ 349,743 $ 406,894 $ 353,110

International markets:

Germany 60,210 46,120 93,939

Japan 31,668 32,781 34,640

Other international markets

44,493 30,713 30,577

International markets - Total

136,371 109,614 159,156

Greater China (1) 23,224 21,332 22,765

Total net revenues $ 509,338 $ 537,840 $ 535,031

(1) For additional information, see c below.

The company's net revenues by performance period are as follows:

Year ended December 31,

2023 2022 2021

Net revenues recognized in the reporting period from performance obligations satisfied in:

Reporting period $ 492,089 $ 480,266 $ 508,337

Previous periods 17,249 57,574 26,694

Total net revenues $ 509,338 $ 537,840 $ 535,031

Contract balances

The following table provides information about trade receivables, unbilled receivables and contract liabilities from contracts with customers::

Trade receivables $ 56,970 $ 84,069

Unbilled receivables $ 4,251 $ 2,192

Deferred revenues (short-term contract liabilities) $ ( 16,224 ) $ ( 18,028 )

Deferred revenues (long-term contract liabilities) $ — $ ( 2,878 )

During the years ended December 31, 2023, 2022and 2021, the Company recognized $ 18,028 , $ 17,762 and $ 17,765 , respectively, which were included in the deferred revenues (short-term contract liability) balance at January 1, 2023 , 2022 and 2021.

Zai agreement:

The Company recognizes revenue pursuant to the License Agreement with Zai (see note 12) in accordance with ASC 606, "Revenue Recognition from Customers." The License Fee was deferred and recognized over the performance period commencing September 10, 2018 ("Zai Performance Period").

The potential development and regulatory milestones will be included in the transaction price when the Company concludes that achievement of the milestones is probable, and that recognition of revenue related to the milestones will not result in a significant reversal in amounts recognized in future periods, and as such have been excluded from the transaction price until

NovoCure Limited and subsidiaries

Notes to consolidated financial statements

dollars in thousands (except share and per share data)

such probability is achieved.

Revenue from royalty payments are recognized in accordance with ASC 606 in the period accrued.

Revenues from sales of product or rendering services are recognized upon shipping the products or rendering the services and satisfying the performance obligation.

During the year ended December 31, 2020, the Company triggered milestone payments of $ 10,000 in the aggregate, which, along with the License Fee, are deferred and recognized over the remainder of the Zai Performance Period on a straight-line basis.

For the three years ended December 31, 2023, no additional milestones were included in the transaction price.

Tax provision :

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Income tax at federal Swiss rate $ ( 16,298 ) $ ( 6,957 ) $ ( 4,426 )

Foreign taxes rate differential 25,716 1,601 2,517

Change in valuation allowance 13,427 ( 14,238 ) 11,643

Effect of tax law change 5,681 — ( 8,694 )

Share based compensation 5,318 ( 4,636 ) ( 1,615 )

Research and development credits ( 4,898 ) ( 2,216 ) ( 5,243 )

Foreign taxes rate differential 10,620 25,716 1,601

Return to provision true-ups 10,854 ( 1,020 ) 2,416

Research and development credits ( 6,483 ) ( 4,898 ) ( 2,216 )

Share based compensation 2,332 5,318 ( 4,636 )

Withholding Taxes 435 548 273

Effect of tax law change 6 5,681 —

Other 410 538 1,621

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Unamortized intangible assets $ 153,450 $ 153,450

Impact of revenue recognition $ 82,972 $ 112,251

Net operating loss carryforwards $ 99,743 $ 65,472

Impact of revenue recognition $ 79,934 $ 82,972

Share based compensation $ 32,639 $ 30,009

Lease liabilities $ 8,128 $ 5,846

Capitalized research and development $ 2,783 $ 16,730

Research and development credits $ 1,615 $ 8,992

Lease liabilities $ 5,846 $ 4,836

Interest limitations $ — $ 7,948

Other temporary differences $ 7,809 $ 7,089

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Carryforward loss:

In Switzerland, the Company had $ 525,131 of net operating carryforwards (NOLs) available at the Federal level, of which $ 497,371 are available at the cantonal and communal level as well.

In Switzerland, the Company had $ 821,963 of net operating carryforwards (NOLs) available at the Federal level, of which $ 794,203 are also available at the cantonal and communal level.

These NOLs expire from 2026 through

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dollars in thousands (except share and per share data)

Additionally, the Company had $ 37,105 of non-Swiss NOLs as of December 31, 2022, of which $ 4,942 carry forward indefinitely.

The remainder expire from 2026 through 2041.

Additionally, the Company had $ 29,357 of non-Swiss NOLs as of December 31, 2023, of which $ 1,968 carry forward indefinitely,and the remainder expire from 2024 through 2042.

Uncertain tax benefits:

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Currently, the Company is under examination by the tax authorities in Israel for the tax years 2019 and 2020 and is not under examination by any other tax authority.

Additional tax years within the period 2016 to 2021 remain subject to examination by Swiss, U.S.

Additional tax years within the period from 2019 to 2022 remain subject to examination by Swiss, U.S.

and other tax authorities.

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3,361,441 $ 188,127

3,162,141 $ 172,602

These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.

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dollars in thousands (except share and per share data)

The fair values of the Company’s RSUs and PSUs vested during the years ended December 31, 2023, 2022 and 2021 were $ 83,968 , $ 44,818 and $ 29,960 , respectively.

The aggregate intrinsic values for the options exercised during the years ended December 31, 2023, 2022 and 2021 were $ 49,679 , $ 26,436 and $ 143,695 , respectively.

29 unchanged sentences

Foreign currency translation losses ( 797 ) ( 3,523 ) ( 4,032 )

Others ( 698 ) ( 779 ) ( 389 )

Bank charges and others

( 732 ) ( 698 ) ( 779 )

$ ( 4,906 ) $ ( 8,113 ) $ ( 8,839 )

Financial income:

Amortization of investments premium $ 26,397 $ 4,829 $ 306

Foreign currency translation gains — — 2,648

Interest income 19,639 10,961 791

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Basic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period.

Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10, as determined under the treasury stock method.

Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs,

NovoCure Limited and subsidiaries

1 unchanged sentence

dollars in thousands (except share and per share data)

convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10, as determined under the treasury stock method.

The following table sets forth the computation of the Company’s basic and diluted net loss per ordinary share:

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Net income (loss) used in computing diluted net income (loss) per share $ ( 207,043 ) $ ( 92,534 ) $ ( 58,351 )

Weighted average number of ordinary shares used in computing basic net income (loss) per share 104,660,476 103,433,274 100,930,866

Potentially dilutive shares that were excluded from the computation of basic net income (loss) per share:

Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share

106,391,178 104,660,476 103,433,274

Potentially dilutive shares that were excluded from the computation of basic and diluted net income (loss) per share:

Options 6,950,781 6,387,275 7,201,495

Restricted share units — — 945,612

RSUs and PSUs

1,423,377 822,421 1,017,799

Conversion of convertible note

ESPP 161,627 62,910 42,725

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 104,660,476 103,433,274 108,877,648

Weighted anti-dilutive shares outstanding which were not included in the diluted calculation 8,535,785 7,272,606 8,524,922

Basic net income (loss) per ordinary share $ ( 0.88 ) $ ( 0.56 ) $ 0.20

Diluted net income (loss) per ordinary share $ ( 0.88 ) $ ( 0.56 ) $ 0.18

Subcontractor

In certain markets and for certain key components, the Company is currently dependent upon sole source suppliers used in its devices.

The Company’s management believes that in most cases other suppliers could provide similar components at comparable terms.

A change of suppliers which requires FDA or other regulatory approval, however, could cause a material delay in manufacturing and a possible loss of sales, which could adversely affect the Company’s operating results and financial position.

Basic and diluted net income (loss) per ordinary share

$ ( 1.95 ) $ ( 0.88 ) $ ( 0.56 )

Supplemental information

The Company operates as one reporting segment.

The following table presents long-lived assets by location:

2 unchanged sentences

Switzerland 7,733 5,084

Japan 1,063 799

Germany 762 1,020

Others 5,179 3,086

Total long-lived assets $ 62,863 $ 45,362

The Company’s net revenues by geographic region, based on the patient’s location are summarized as follows:

Year ended December 31,

2022 2021 2020

United States $ 406,894 $ 353,110 $ 340,782

Germany 46,120 93,939 93,264

Other EMEA 30,713 30,577 18,654

Japan 32,781 34,640 29,076

Greater China (1) 21,332 22,765 12,590

Total net revenues $ 537,840 $ 535,031 $ 494,366

(1) For additional information, see Note 12.

Selected quarterly financial information (Unaudited)

The following table sets forth selected financial information for the Company:

Three months ended

December 31 September 30 June 30 March 31

Net revenues $ 128,429 $ 130,998 $ 140,866 $ 137,547

Gross profit 99,541 101,249 112,363 109,820

Operating income (loss) ( 42,978 ) ( 24,611 ) ( 21,128 ) ( 806 )

Net income (loss) ( 37,303 ) ( 26,576 ) ( 24,008 ) ( 4,647 )

Basic net income (loss) per ordinary share $ ( 0.36 ) $ ( 0.25 ) $ ( 0.23 ) $ ( 0.04 )

Weighted average number of ordinary shares used in computing basic net income (loss) per share 105,026,945 104,884,583 104,627,789 104,186,120

Diluted net income (loss) per ordinary share $ ( 0.36 ) $ ( 0.25 ) $ ( 0.23 ) $ ( 0.04 )

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 105,026,945 104,884,583 104,627,789 104,186,120

Three months ended

December 31 September 30 June 30 March 31

Net revenues $ 133,213 $ 133,606 $ 133,517 $ 134,695

Gross profit 103,526 103,400 104,918 108,310

Operating income (loss) ( 23,398 ) ( 8,552 ) ( 12,295 ) ( 88 )

Net income (loss) ( 26,458 ) ( 13,124 ) ( 14,641 ) ( 4,128 )

Basic net income (loss) per ordinary share $ ( 0.25 ) $ ( 0.13 ) $ ( 0.14 ) $ ( 0.04 )

Weighted average number of ordinary shares used in computing basic net income (loss) per share 103,884,288 103,731,147 103,484,866 102,633,545

Diluted net income (loss) per ordinary share $ ( 0.25 ) $ ( 0.13 ) $ ( 0.14 ) $ ( 0.04 )

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 103,884,288 103,731,147 103,484,866 102,633,545

Three months ended

December 31 September 30 June 30 March 31

Net revenues $ 143,953 $ 132,660 $ 115,925 $ 101,828

Gross profit 115,817 104,265 90,451 77,332

Operating income (loss) 12,092 15,022 6,668 ( 3,381 )

Net income (loss) 4,917 9,284 1,655 3,952

Basic net income (loss) per ordinary share $ 0.05 $ 0.09 $ 0.02 $ 0.04

Weighted average number of ordinary shares used in computing basic net income (loss) per share 101,945,085 101,234,306 100,718,893 99,877,567

Diluted net income (loss) per ordinary share $ 0.04 $ 0.09 $ 0.02 $ 0.04

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 110,604,714 108,643,814 107,647,802 108,100,623

Subsequent Event

On February 17, 2023, the Company gave irrevocable notice to the administrative agent under the Credit Facility that the Company terminated all commitments, effective February 22, 2023.

See Note 12c.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data