NovoCure Ltd 10-Q

Item 1. Financial Statements NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share data) March 31, 2024 December 31, 2023 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 453,763 $ 240,821 Short-term investments 416,384 669,795 Restricted cash 3,600 1,743 Trade receivables, net 65,091 61,221 Receivables and prepaid expenses 21,479 22,677 Inventories 42,391 38,152 Total current assets 1,002,708 1,034,409 LONG-TERM ASSETS: Property and equipment, net 58,917 51,479 Field equipment, net 11,911 11,384 Right-of-use assets 32,994 34,835 Other long-term assets 14,899 14,022 Total long-term assets 118,721 111,720 TOTAL ASSETS $ 1,121,429 $ 1,146,129 The accompanying notes are an integral part of these unaudited consolidated financial statements. 2 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except share data) March 31, 2024 December 31, 2023 Unaudited Audited LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 84,316 $ 94,391 Other payables, lease liabilities and accrued expenses 75,914 84,724 Total current liabilities 160,230 179,115 LONG-TERM LIABILITIES: Long-term debt, net 569,652 568,822 Long-term leases 25,608 27,420 Employee benefit liabilities 6,566 8,258 Other long-term liabilities 18 18 Total long-term liabilities 601,844 604,518 TOTAL LIABILITIES 762,074 783,633 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Share capital - Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 107,603,774 shares and 107,075,754 shares at March 31, 2024 (unaudited) and December 31, 2023, respectively — — Additional paid-in capital 1,387,765 1,353,468 Accumulated other comprehensive income (loss) ( 4,147 ) ( 5,469 ) Retained earnings (accumulated deficit) ( 1,024,263 ) ( 985,503 ) TOTAL SHAREHOLDERS' EQUITY 359,355 362,496 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,121,429 $ 1,146,129 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share and per share data) Three months ended March 31, Year ended December 31, 2024 2023 2023 Unaudited Audited Net revenues $ 138,503 $ 122,182 $ 509,338 Cost of revenues 33,689 29,614 128,280 Gross profit 104,814 92,568 381,058 Operating costs and expenses: Research, development and clinical studies 51,598 59,704 223,062 Sales and marketing 55,206 51,169 226,809 General and administrative 39,530 41,944 164,057 Total operating costs and expenses 146,334 152,817 613,928 Operating income (loss) ( 41,520 ) ( 60,249 ) ( 232,870 ) Financial income (expenses), net 9,878 9,169 41,130 Income (loss) before income tax ( 31,642 ) ( 51,080 ) ( 191,740 ) Income tax 7,118 1,981 15,303 Net income (loss) $ ( 38,760 ) $ ( 53,061 ) $ ( 207,043 ) Basic and diluted net income (loss) per ordinary share $ ( 0.36 ) $ ( 0.50 ) $ ( 1.95 ) Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per share 107,266,198 105,667,072 106,391,178 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) U.S. dollars in thousands Three months ended March 31, Year ended December 31, 2024 2023 2023 Unaudited Audited Net income (loss) $ ( 38,760 ) $ ( 53,061 ) $ ( 207,043 ) Other comprehensive income (loss), net of tax: Change in foreign currency translation adjustments ( 327 ) 300 1,473 Unrealized gain (loss) from debt securities — 357 445 Pension benefit plan 1,649 ( 915 ) ( 4,954 ) Total comprehensive income (loss) $ ( 37,438 ) $ ( 53,319 ) $ ( 210,079 ) NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY U.S. dollars in thousands (except share data) Ordinary shares Additional paid-in capital Accumulated other comprehensive loss Retained earnings (accumulated deficit) Total shareholders' equity Balance as of December 31, 2023 (audited) 107,075,754 $ 1,353,468 $ ( 5,469 ) $ ( 985,503 ) $ 362,496 Share-based compensation to employees — 34,084 — — 34,084 Exercise of options and vested RSUs 528,020 213 — — 213 Other comprehensive income (loss), net of tax benefit of $ 0 — — 1,322 — 1,322 Net income (loss) — — — ( 38,760 ) ( 38,760 ) Balance as of March 31, 2024 (Unaudited) 107,603,774 $ 1,387,765 $ ( 4,147 ) $ ( 1,024,263 ) $ 359,355 Ordinary shares Additional paid-in capital Accumulated other comprehensive loss Retained earnings (accumulated deficit) Total shareholders' equity Balance as of December 31, 2022 (audited) 105,049,411 $ 1,222,063 $ ( 2,433 ) $ ( 778,460 ) $ 441,170 Share-based compensation to employees — 39,084 — — 39,084 Exercise of options and vested RSUs 1,137,751 5,211 — — 5,211 Other comprehensive income (loss), net of tax benefit of $ 0 — — ( 258 ) — ( 258 ) Net income (loss) — — — ( 53,061 ) ( 53,061 ) Balance as of March 31, 2023 (Unaudited) 106,187,162 $ 1,266,358 $ ( 2,691 ) $ ( 831,521 ) $ 432,146 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Three months ended March 31, Year ended December 31, 2024 2023 2023 Unaudited Audited Cash flows from operating activities: Net income (loss) $ ( 38,760 ) $ ( 53,061 ) $ ( 207,043 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,815 2,722 10,969 Accrued Interest 1,622 ( 1,120 ) ( 95 ) Asset write-downs and impairment of field equipment 194 126 493 Share-based compensation 34,084 39,084 115,608 Foreign currency remeasurement loss (gain) 613 ( 127 ) 161 Decrease (increase) in accounts receivables and prepaid expenses ( 3,275 ) 14,511 29,414 Amortization of discount (premium) ( 5,381 ) ( 4,056 ) ( 23,084 ) Decrease (increase) in inventories ( 4,650 ) ( 2,718 ) ( 8,919 ) Decrease (increase) in other long-term assets 1,174 1,534 4,072 Increase (decrease) in accounts payables and accrued expenses ( 18,245 ) ( 10,464 ) 14,869 Increase (decrease) in other long-term liabilities ( 1,765 ) ( 3,158 ) ( 9,781 ) Net cash provided by (used in) operating activities ( 31,574 ) ( 16,727 ) ( 73,336 ) Cash flows from investing activities: Purchase of property, equipment and field equipment ( 11,784 ) ( 6,088 ) ( 27,093 ) Proceeds from maturity of short-term investments 258,000 326,287 1,214,982 Purchase of short-term investments — ( 237,912 ) ( 1,003,741 ) Net cash provided by (used in) investing activities 246,216 82,287 184,148 Cash flows from financing activities: Proceeds from issuance of shares, net — — 4,416 Repayment of long-term debt — ( 7 ) ( 10 ) Exercise of options 213 5,211 11,381 Net cash provided by (used in) financing activities 213 5,204 15,787 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 56 ) 41 131 Increase (decrease) in cash, cash equivalents and restricted cash 214,799 70,805 126,730 Cash, cash equivalents and restricted cash at the beginning of the period 242,564 115,834 115,834 Cash, cash equivalents and restricted cash at the end of the period $ 457,363 $ 186,639 $ 242,564 Supplemental cash flow activities: Cash paid during the period for: Income taxes paid (refunded), net $ 2,914 $ 1,712 $ 13,665 Interest paid $ 2 $ 1 $ 6 Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 453,763 $ 185,963 $ 240,821 Restricted cash 3,600 676 1,743 Total cash, cash equivalents and restricted cash $ 457,363 $ 186,639 $ 242,564 6 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Non-cash activities: Right-of-use assets obtained in exchange for lease liabilities $ 282 $ 3,451 $ 18,063 Purchase of property incurred but unpaid at period end $ 1,062 $ — $ 1,714 The accompanying notes are an integral part of these unaudited consolidated financial statements. 7 Table of Contents NOVOCURE LIMITED AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS U.S. dollars in thousands (except share data) NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION Organization . 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 markets Optune and Optune Lua in multiple countries around the globe with the majority of revenues coming from the use of Optune in the U.S., Germany and Japan. 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"). Financial statement preparation . The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the unaudited consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these unaudited consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These unaudited consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 10-K") filed with the Securities and Exchange Commission on February 22, 2024. The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2023 10-K are applied consistently in these unaudited interim consolidated financial statements. Concentration Risks. The Company's cash, cash equivalents, short-term investments and trade receivables are potentially subject to a concentration of risk. Cash, cash equivalents and short-term investments are invested at top tier financial institutions globally and the total value invested at any one institution is limited pursuant to the Company's investment policy. These investments may be in excess of insured limitations or not insured in certain jurisdictions. Generally, these investments may be redeemed upon demand according to the terms of the securities. The Company's trade receivables are due from numerous governments and federal and state agencies that are paid from their respective budgets, and from hundreds of health insurance companies. The Company does not believe that there are significant default risks associated with these governments, agencies and health insurance companies based upon the Company's historical experience. The Company has no off-balance sheet concentrations of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. Recently announced 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 . 8 Table of Contents NOTE 2: CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased. As of March 31, 2024 and December 31, 2023, the Company’s cash and cash equivalents and short-term investments were composed of: March 31, 2024 Unaudited Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments (2) Cash $ 17,626 $ — $ — $ 17,626 $ 17,626 $ 17,626 $ — Money market funds Level 1 303,191 — — 303,191 303,191 303,191 — Certificate of deposits and term deposits Level 2 116,052 — — 116,052 116,052 23,204 92,848 HTM securities (1) U.S. Treasury bills Level 1 $ 139,373 $ 72 $ — 139,445 139,373 $ 109,742 $ 29,631 Corporate debt securities Level 2 $ 293,905 $ 297 $ ( 5 ) 294,197 293,905 $ — $ 293,905 $ 433,278 $ 369 $ ( 5 ) $ 433,642 $ 433,278 $ 109,742 $ 323,536 Total $ 870,147 $ 369 $ ( 5 ) $ 870,511 $ 870,147 $ 453,763 $ 416,384 December 31, 2023 Audited Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments (2) Cash $ 9,955 $ — $ — $ 9,955 $ 9,955 $ 9,955 $ — Money market funds Level 1 227,166 — — 227,166 227,166 227,166 — Certificate of deposits and term deposits Level 2 153,169 — — 153,169 153,169 3,700 149,469 HTM securities (1) U.S. Treasury bills Level 1 $ 78,844 $ 55 $ ( 110 ) 78,789 78,844 $ — $ 78,844 Government and governmental agencies Level 2 $ 24,940 $ 13 $ — 24,953 24,940 $ — $ 24,940 Corporate debt securities Level 2 $ 416,542 $ 486 $ ( 149 ) 416,879 416,542 $ — $ 416,542 $ 520,326 $ 554 $ ( 259 ) $ 520,621 $ 520,326 $ — $ 520,326 Total $ 910,616 $ 554 $ ( 259 ) $ 910,911 $ 910,616 $ 240,821 $ 669,795 (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. 9 Table of Contents (2) Pursuant to a bank guaranty agreement, $ 16,189 of short-term investments are pledged. See Note 4. In accordance with ASC 820, "Fair Value Measurements and Disclosures," 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 March 31, 2024 and December 31, 2023, all investments mature in one year or less. Unrealized losses from debt securities are primarily attributable to changes in interest rates. The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence. NOTE 3: INVENTORIES Inventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of March 31, 2024 and December 31, 2023, the Company’s inventories were composed of: March 31, 2024 December 31, 2023 Unaudited Audited Raw materials $ 10,174 $ 10,265 Work in progress 11,934 9,796 Finished products 20,283 18,091 Total $ 42,391 $ 38,152 NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2044. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2027. Pledged deposits and bank guarantees. As of March 31, 2024 and December 31, 2023, the Company pledged bank deposits of $ 2,798 and $ 2,848 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $ 3,157 and $ 3,216 , respectively. In addition, € 15,000 ($ 16,189 ) of the Company's short term investments are pledged to a bank as guarantee for the Company's due execution of cash concentration agreements. 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, which 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, 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 March 31, 2024, 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. NOTE 5: CONVERTIBLE NOTE On November 5, 2020, the Company issued $ 575,000 aggregate principal amount of 0 % Convertible Senior Notes due 2025 (the “Notes”). The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes. As of March 31, 2024, the conditions allowing holders of the Notes to convert were not met. The Notes are therefore not convertible as of March 31, 2024 and are classified as long-term liability. 10 Table of Contents The net carrying amount of the liability of the Notes as of March 31, 2024 and December 31, 2023 are as follows: March 31, 2024 December 31, 2023 Unaudited Audited Liability component, net: Principal amount $ 575,000 $ 575,000 Unamortized issuance costs ( 5,348 ) ( 6,178 ) Net carrying amount of liability component (1) $ 569,652 $ 568,822 (1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820. The estimated fair value of the net carrying amount of liability component of the Notes as of March 31, 2024 and December 31, 2023 were $ 525,865 and $ 515,962 , respectively. 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. Finance expense related to the Notes was as follows: Three months ended March 31, Year ended December 31, 2023 2024 2023 Unaudited Audited Amortization of debt issuance costs 830 815 3,313 Total finance expense recognized $ 830 $ 815 $ 3,313 11 Table of Contents NOTE 6: REVENUE RECOGNITION a. Net revenues The Company’s net revenues by geographic region, based on the patient’s location are summarized as follows: Three months ended March 31, Year ended December 31, 2024 2023 2023 United States $ 90,543 $ 85,228 $ 349,743 International markets: Germany 15,747 15,120 60,210 Japan 7,817 8,669 31,668 Other international markets 19,459 7,850 44,493 International markets - Total 43,023 31,639 136,371 Greater China (1) 4,937 5,315 23,224 Total net revenues $ 138,503 $ 122,182 $ 509,338 (1) For additional information, see Notes 12 and 13 to the Consolidated Financial Statements in the 2023 10-K. The Company's net revenues by performance period are as follows: Three months ended March 31, Year ended December 31, 2024 2023 2023 Net revenues recognized in the reporting period from performance obligations satisfied in: Reporting period $ 129,256 $ 117,338 $ 492,089 Previous periods 9,247 4,844 17,249 Total net revenues $ 138,503 $ 122,182 $ 509,338 b. Contract balances The following table provides information about trade receivables, unbilled receivables and contract liabilities from contracts with customers: March 31, 2024 December 31, 2023 Unaudited Audited Trade receivables $ 60,401 $ 56,970 Unbilled receivables $ 4,690 $ 4,251 Deferred revenues (short-term contract liabilities) ( 15,870 ) ( 16,224 ) During the three months ended March 31, 2024 and 2023 and the year ended December 31, 2023 the Company recognized $ 16,224 , $ 18,028 and $ 18,028 , respectively, which were included in the deferred revenues (short-term contract liability) balance at January 1, 2024 and 2023. NOTE 7: SHARE OPTION PLANS AND ESPP In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards. Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three-year period. PSUs 12 Table of Contents granted under the 2015 Plan generally vest between a three - and six-year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of March 31, 2024, 11,027,556 ordinary shares were available for grant under the 2015 Plan. A summary of the status of the Company’s option plans as of March 31, 2024 and changes during the period then ended is presented below: Three months ended March 31, 2024 Unaudited Number of options Weighted average exercise price Outstanding at beginning of year 8,539,507 $ 40.07 Granted 3,456,485 15.35 Exercised ( 26,547 ) 8.70 Forfeited and canceled ( 180,377 ) 58.72 Outstanding as of March 31, 2024 11,789,068 $ 32.61 Exercisable options 6,990,097 $ 34.67 A summary of the status of the Company’s RSUs and PSUs as of March 31, 2024 and changes during the period then ended is presented below. Three months ended March 31, 2024 Unaudited Number of RSU/PSUs Weighted average grant date fair value Unvested at beginning of year 5,813,066 $ 60.52 Granted 8,930,183 15.17 Vested ( 501,473 ) 90.19 Forfeited and cancelled ( 337,925 ) 74.50 Unvested as of March 31, 2024 (1) 13,903,851 29.98 (1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones that are not probable as of March 31, 2024, in accordance with ASC 718 "Compensation — Stock Compensation" as follows: March 31, 2024 Number of PSUs Fair value at grant date per PSU Total fair value at grant date 588,952 $ 16.30 $ 9,600 2,703,852 $ 48.16 $ 130,218 220,533 76.97 16,974 249,402 80.59 20,099 15,210 87.66 1,333 3,777,949 $ 178,226 These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718. 13 Table of Contents In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of March 31, 2024, 5,735,791 ordinary shares were available to be purchased by eligible employees under the ESPP. The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. The Company assessed fair value using the following underlying assumptions: Three months ended March 31, Year ended December 31, 2023 2024 2023 Unaudited Audited Stock Option Plans Expected term (years) 5.73 - 5.73 5.75 - 6.00 5.50 - 6.00 Expected volatility 71 %- 72 % 63 %- 64 % 63 %- 70 % Risk-free interest rate 3.88 %- 4.28 % 4.08 %- 4.10 % 3.48 %- 4.79 % Dividend yield 0.00 % 0.00 % 0.00 % ESPP Expected term (years) 0.50 0.50 0.50 Expected volatility 90 % 56 % 56 %- 122 % Risk-free interest rate 5.13 % 4.76 % 4.76 %- 5.38 % Dividend yield 0.00 % 0.00 % 0.00 % The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three months ended March 31, 2024 and 2023, and the year ended December 31, 2023 was: Three months ended March 31, Year ended December 31, 2023 2024 2023 Unaudited Audited Cost of revenues $ 1,747 $ 2,006 $ 6,587 Research, development and clinical studies 8,610 11,779 31,827 Sales and marketing 11,048 11,644 35,968 General and administrative 12,679 13,655 41,226 Total share-based compensation expense $ 34,084 $ 39,084 $ 115,608 NOTE 8: Basic and diluted net income (loss) per ordinary share 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 "Earnings Per Share", as determined under the treasury stock or if-converted method, as applicable. 14 Table of Contents The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share: Three months ended March 31, Year ended December 31, 2023 2024 2023 Unaudited Audited Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share $ ( 38,760 ) $ ( 53,061 ) $ ( 207,043 ) Weighted average number of ordinary shares used in computing diluted net income (loss) per share 107,266,198 105,667,072 106,391,178 Potentially anti-dilutive shares that were excluded from the computation of basic net income (loss) per share: Options 8,246,017 6,337,929 6,950,781 RSUs and PSUs 4,375,948 1,178,521 1,423,377 ESPP 99,055 27,207 161,627 Weighted anti-dilutive shares outstanding which were not included in the diluted calculation 12,721,020 7,543,657 8,535,785 Basic and diluted net income (loss) per ordinary share $ ( 0.36 ) $ ( 0.50 ) $ ( 1.95 ) NOTE 9: SUPPLEMENTAL INFORMATION The Company operates in a single reportable segment. The following table presents long-lived assets by location: March 31, 2024 December 31, 2023 Unaudited Audited United States $ 45,358 $ 41,634 Israel 8,290 8,317 Switzerland 10,940 7,733 Others 6,240 5,179 Total long lived assets $ 70,828 $ 62,863 Restructuring 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 incurred restructuring costs (including severance pay, garden leave payments, etc.) in the amount of $ 2,031 and $ 6,231 for the three months ended March 31, 2024 and the year ended December 31, 2023, respectively, as follows: 15 Table of Contents Three months ended March 31, Year ended December 31, 2023 2024 Unaudited Audited Cost of revenues $ 52 $ 262 Research, development and clinical studies 275 2,070 Sales and marketing 1,539 2,404 General and administrative 164 1,495 Total restructuring cost $ 2,031 $ 6,231 Restructuring costs paid during the period $ 5,128 $ 2,753 These restructuring costs were offset by accrual reversals for the three months ended March 31, 2024 and the year ended December 31, 2023 in the amount of $ 369 and $ 3,041 , respectively, which relate to the terminated employees' exits from the Company’s cash incentive plans. These restructuring costs were further offset by forfeited equity-based compensation expense reversals for the three months ended March 31, 2024 and the year ended December 31, 2023 in the amount of $ 1,661 and $ 9,313 , respectively, which relate to the terminated employees' exits from the Company’s equity incentive plan. NOTE 10: SUBSEQUENT EVENT On May 1, 2024 Novocure Luxembourg S.a.r.l. ("Borrower"), a wholly-owned subsidiary of the Company, entered into a new five-year senior secured credit facility of up to $ 400.0 million (the "Facility") with BPCR Limited Partnership and BioPharma Credit Investments V (Master) LP (collectively, the "Lenders"), BioPharma Credit PLC, as collateral agent for the Lenders, and the guarantors party to such agreement (the "Loan Agreement"). The Facility may be drawn in up to four drawings. The Loan Agreement provides for an initial term loan in the principal amount of $ 100.0 million (the "Tranche A Loan"), which was funded to the Borrower on May 1, 2024 (the "Tranche A Funding Date"). Under the Loan Agreement, the Borrower is required to draw $ 100.0 million on the Facility on or before June 30, 2025 (the "Tranche B Loan"), subject to customary conditions precedent as set forth in the Loan Agreement. Not later than December 31, 2025, the Borrower has the option to draw an additional $ 100.0 million of the Facility (the "Tranche C Loan") if (i) (A) the Company has received positive results from its PANOVA-3 phase 3 clinical trial or (B) the Company's trailing net revenues for the most recently completed four quarters as reported by the Company in its financial statements filed with the U.S. Securities and Exchange Commission ("Trailing Four Quarters of Net Revenue") are greater than $ 575.0 million and (ii) the Company's Convertible Notes due 2025 are extinguished in full and are no longer outstanding. Not later than March 31, 2026, the Borrower has the option to draw an additional $ 100.0 million of the Facility (the "Tranche D Loan") if (i) the Company receives an approval or clearance from the U.S. Food and Drug Administration for the Company's Tumor Treating Fields device for a pancreatic cancer indication or (ii) Trailing Four Quarters of Net Revenue is greater than $ 625.0 million. The obligations under the Loan Agreement are guaranteed by certain of the Company's subsidiaries and secured by a first lien on the Borrower's and certain of the Company's other subsidiaries’ assets. Outstanding term loans under the Loan Agreement will bear interest at an annual rate equal to 6.25 % plus the three-month SOFR (subject to a 3.25 % floor), payable quarterly in arrears and calculated on the basis of actual days elapsed in a 360-day year. The Borrower must pay 2.5 % of additional consideration on each principal draw, with payment for the Tranche A Loan and the Tranche B Loan paid on the Tranche A Funding Date, and payments for the Tranche C Loan and the 16 Table of Contents Tranche D Loan on their respective funding dates. Principal under the Facility will be repaid in eight equal quarterly repayments commencing with the third quarter of 2027 and continuing each quarter thereafter, with the final payment of outstanding principal due on the fifth anniversary of the Tranche A Funding Date. Voluntary prepayment of all, but not less than all, of the term loans outstanding is permitted at any time, subject to make-whole and prepayment premiums as set forth in the Loan Agreement. Prepayment of all term loans outstanding, subject to make-whole and prepayment premiums, is due and payable upon a change-in-control as defined in the Loan Agreement. Make-whole and prepayment premiums are due and payable for the Tranche B Loans for any voluntary prepayment of the term loans outstanding, upon a change-in-control (as defined in the Loan Agreement), and upon any acceleration of the maturity date, in each case regardless of whether the Tranche B Loan is drawn. The Loan Agreement contains a financial covenant only if the Tranche C Loan and/or Tranche D Loan are funded, in which case the Company is required to maintain at least Trailing Four Quarters of Net Revenue of at least $ 500.0 million, calculated on a trailing twelve-month basis as of the end of each fiscal quarter, beginning with the first quarter of 2027 based on year-end 2026 audited financial statements. 17 Table of Contents