- Reports Total Revenues of $3.92
Billion; U.S. GAAP Net Earnings of $264 Million; Adjusted EBITDA of $1.31 Billion; U.S. GAAP Net Cash Provided by
Operating Activities of $515 Million;
and Free Cash Flow of $447 Million
for the Quarter
- Strong Results Signal Expected Beginning of Growth
Journey
- Reaffirms that Full-Year Total Revenues, Adjusted EBITDA and
Free Cash Flow Expected to be at Midpoint of 2023 Guidance
Ranges[1]
- Pays Down $727 Million of Debt
Year to Date
- Remains on Track to Announce Planned Divestitures in
2023
- Board of Directors Declares Quarterly Dividend of
$0.12 per Share
PITTSBURGH, Aug. 7, 2023
/PRNewswire/ -- Viatris Inc. (NASDAQ: VTRS) today reported another
strong quarter of operating results which continues to set the
Company up well as it prepares to bring its Phase 1 strategy to an
end and position itself for a strong beginning of Phase 2 in 2024
and beyond.
Executive Commentary
Viatris CEO Scott A. Smith said:
"Obviously, I could not be more pleased with our overall execution
in the second quarter—one of the strongest quarters we've had to
date at Viatris. These results signal what we expect to be the
beginning of a growth journey for Viatris and set us up well for
future success. As proud as I am of our strong performance, the
foundation the Company has built and the stability and
predictability we believe have clearly been achieved, my focus is
on the future trajectory of the Company. I'm pleased to say we
believe we are currently on track to announce all planned
divestitures in 2023, including at least one significant
divestiture in the third quarter, possibly more. The Company has
laid out clear capital allocation and business development
priorities for Phase 2 and we are fully dedicated to meeting these
priorities to propel Viatris up the value chain and increase our
return of capital to shareholders."
Viatris President Rajiv Malik
said: "Our performance this quarter highlights our Company's
momentum like never before and further reinforces the
predictability in our base business. Our strong and highly
diversified business model of bringing access has never depended on
any one product, portfolio or market. We believe this diversity
lays a solid foundation for growth in Phase 2, beginning in 2024.
We continue to execute and are making consistent progress on our
deep pipeline and are on track to meet our full-year 2023 new
product revenue target. In addition, I would be remiss not to call
out our significant achievement of another first with our launch of
Breyna, our generic Symbicort, in July."
Viatris CFO Sanjeev Narula said:
"We are pleased with our strong fundamentals and continued
excellent operational performance. It was another solid quarter of
free cash flow generation which allowed us to deliver on our
capital allocation priorities. We continue to prioritize
deleveraging the balance sheet with $6.1
billion of debt paydown since the beginning of 2021.
Additionally, we returned approximately $144
million of capital to our shareholders in the quarter in
dividends. We are reaffirming our financial guidance for 2023 as a
result of our strong performance in the first half of the year and
the momentum we have going into the second half."
Return of Capital to Shareholders
Viatris announced that, on August 4, 2023, its Board of
Directors declared a quarterly dividend of twelve cents ($0.12) for each issued and outstanding share of
the Company's common stock. The dividend is payable on
September 15, 2023, to shareholders of record at the close of
business on August 24, 2023.
Viatris paid a quarterly cash dividend of twelve cents ($0.12) per share on the Company's issued and
outstanding common stock on June 16,
2023.
Conference Call and Earnings Materials
Viatris Inc. will host a conference call and live webcast, today
at 8:30 a.m. ET, to discuss the
Company's financial results for the second quarter of 2023.
Investors and the general public are invited to listen to a live
webcast of the call at investor.viatris.com or by calling
800-274-8461 or 203-518-9783 for international callers (Conference
ID: VTRSQ223). The "Viatris Q2 Earnings Presentation," which will
be referenced during the call, can be found at
investor.viatris.com. A replay of the webcast also will be
available on the website.
[1] Viatris is not providing forward-looking guidance
for U.S. GAAP net earnings (loss) or a quantitative reconciliation
of its 2023 adjusted EBITDA guidance. U.S. GAAP net cash provided
by operating activities for 2023 is estimated to be between
$2.8 billion and $3.1 billion. Please see "2023 Financial
Guidance" and "Non-GAAP Financial Measures" for additional
information.
Financial
Summary
|
|
|
Three Months
Ended
|
|
June
30,
|
(Unaudited; in
millions, except %s)
|
2023
|
|
2022
|
|
Reported
Change
|
|
Operational
Change(1) (3)
|
|
Divestiture
Adjusted
Operational
Change(2) (3)
|
Total Net
Sales
|
$ 3,909.5
|
|
$ 4,105.4
|
|
(5) %
|
|
(3) %
|
|
1 %
|
Developed
Markets
|
2,353.8
|
|
2,479.1
|
|
(5) %
|
|
(6) %
|
|
1 %
|
Emerging
Markets
|
648.1
|
|
650.9
|
|
— %
|
|
8 %
|
|
10 %
|
JANZ
|
375.5
|
|
427.1
|
|
(12) %
|
|
(6) %
|
|
(7) %
|
Greater
China
|
532.1
|
|
548.3
|
|
(3) %
|
|
2 %
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$ 2,444.7
|
|
$ 2,483.1
|
|
(2) %
|
|
— %
|
|
— %
|
Complex Gx
|
139.2
|
|
354.8
|
|
(61) %
|
|
(61) %
|
|
(27) %
|
Generics
|
1,325.6
|
|
1,267.5
|
|
5 %
|
|
8 %
|
|
8 %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$ 1,608.6
|
|
$ 1,703.3
|
|
(6) %
|
|
|
|
|
U.S. GAAP Gross
Margin
|
41.1 %
|
|
41.4 %
|
|
|
|
|
|
|
Adjusted Gross Profit
(3)
|
$ 2,331.7
|
|
$ 2,411.7
|
|
(3) %
|
|
|
|
|
Adjusted Gross Margin
(3)
|
59.5 %
|
|
58.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net
Earnings
|
$
264.0
|
|
$
313.9
|
|
(16) %
|
|
|
|
|
Adjusted Net Earnings
(3)
|
$
905.4
|
|
$ 1,065.3
|
|
(15) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(3)
|
$ 1,163.4
|
|
$ 1,257.6
|
|
(7) %
|
|
|
|
|
Adjusted EBITDA
(3)
|
$ 1,305.7
|
|
$ 1,482.1
|
|
(12) %
|
|
(9) %
|
|
(8) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$
514.9
|
|
$
802.5
|
|
(36) %
|
|
|
|
|
Capital
expenditures
|
67.8
|
|
83.9
|
|
(19) %
|
|
|
|
|
Free cash flow
(3)
|
$
447.1
|
|
$
718.6
|
|
(38) %
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
June
30,
|
(Unaudited; in
millions, except %s)
|
2023
|
|
2022
|
|
Reported
Change
|
|
Operational
Change(1) (3)
|
|
Divestiture
Adjusted
Operational
Change(2) (3)
|
Total Net
Sales
|
$ 7,628.6
|
|
$ 8,283.6
|
|
(8) %
|
|
(4) %
|
|
— %
|
Developed
Markets
|
4,524.2
|
|
4,955.2
|
|
(9) %
|
|
(7) %
|
|
(1) %
|
Emerging
Markets
|
1,290.0
|
|
1,356.1
|
|
(5) %
|
|
3 %
|
|
5 %
|
JANZ
|
717.7
|
|
850.9
|
|
(16) %
|
|
(9) %
|
|
(9) %
|
Greater
China
|
1,096.7
|
|
1,121.4
|
|
(2) %
|
|
3 %
|
|
3 %
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$ 4,865.0
|
|
$ 5,037.2
|
|
(3) %
|
|
— %
|
|
— %
|
Complex Gx
|
275.3
|
|
745.6
|
|
(63) %
|
|
(63) %
|
|
(34) %
|
Generics
|
2,488.3
|
|
2,500.8
|
|
— %
|
|
4 %
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$ 3,150.8
|
|
$ 3,474.5
|
|
(9) %
|
|
|
|
|
U.S. GAAP Gross
Margin
|
41.2 %
|
|
41.8 %
|
|
|
|
|
|
|
Adjusted Gross Profit
(3)
|
$ 4,582.6
|
|
$ 4,905.1
|
|
(7) %
|
|
|
|
|
Adjusted Gross Margin
(3)
|
59.9 %
|
|
59.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net
Earnings
|
$
488.7
|
|
$
713.1
|
|
(31) %
|
|
|
|
|
Adjusted Net Earnings
(3)
|
$ 1,838.3
|
|
$ 2,190.6
|
|
(16) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(3)
|
$ 2,363.1
|
|
$ 2,667.2
|
|
(11) %
|
|
|
|
|
Adjusted EBITDA
(3)
|
$ 2,646.6
|
|
$ 3,068.4
|
|
(14) %
|
|
(10) %
|
|
(8) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$ 1,486.1
|
|
$ 1,941.0
|
|
(23) %
|
|
|
|
|
Capital
expenditures
|
115.6
|
|
148.4
|
|
(22) %
|
|
|
|
|
Free cash flow
(3)
|
$ 1,370.5
|
|
$ 1,792.6
|
|
(24) %
|
|
|
|
|
___________
|
(1)
|
Represents operational
change for net sales and adjusted EBITDA which excludes the impacts
of foreign currency translation. See "Certain Key Terms and
Presentation Matters" in this release for more
information.
|
(2)
|
Represents adjustments
for impact of the biosimilars divestitures in November 2022 on an
operational basis and a reclassification. See "Certain Key Terms
and Presentation Matters" in this release for more
information.
|
(3)
|
Non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional
information.
|
|
|
Financial Highlights
- Second quarter 2023 total net sales totaled $3.9 billion, up 1% on a divestiture adjusted
operational basis (as defined in "Certain Key Terms and
Presentation Matters" below) compared to Q2 2022 results.
- Brands performed in line with expectations, reflecting strong
year-over-year performance in key brands including
Yupelri® and sales from Tyrvaya®.
- Complex generics performed in line with expectations.
- Generics, which include diversified product forms such as oral
solids, injectables, transdermals and topicals, performed ahead of
expectations, due to strong performance across broader Developed
and Emerging Markets portfolios.
- The Company generated approximately $124
million in new product revenues (as defined in "Certain Key
Terms and Presentation Matters" below) in the second quarter
(approximately $209 million for the
first half of the year) primarily driven by lenalidomide in the
U.S. and is on track to achieve approximately $500 million in new product revenues in
2023.
- The Company had U.S. GAAP net cash provided by operating
activities of $515 million in the
second quarter ($1.49 billion for the
first half of year) and generated $447
million of free cash flow in the second quarter
($1.37 billion for the first half of
year), primarily driven by strong operating results and the timing
of planned capital expenditures. U.S. GAAP net cash provided by
operating activities and free cash flow for the second quarter
included approximately $9 million
($31 million for the first half of
the year) of transaction costs primarily related to the eye care
acquisitions and the biosimilars divestiture and approximately
$10 million (same for the first half
of the year) related to acquired IPR&D.
- The Company paid down $181
million in debt in the second quarter ($727 million for the first half of the year). The
Company remains fully committed to maintaining its investment grade
credit rating.
2023 Financial Guidance
Viatris is reaffirming its 2023 financial guidance that was
previously provided on February 27,
2023, as set forth below. The Company is not providing
forward-looking guidance for U.S. GAAP net earnings or a
quantitative reconciliation of its 2023 adjusted EBITDA guidance to
the most directly comparable U.S. GAAP measure, U.S. GAAP net
earnings, because it is unable to predict with reasonable certainty
the ultimate outcome of certain significant items, including
integration, acquisition and divestiture related expenses,
restructuring expenses, asset impairments, litigation settlements,
and other contingencies, such as changes to contingent
consideration, acquired IPR&D and certain other gains or
losses, including for the fair value accounting for non-marketable
equity investments, as well as related income tax accounting,
because certain of these items have not occurred, are out of the
Company's control and/or cannot be reasonably predicted without
unreasonable effort. These items are uncertain, depend on various
factors, and could have a material impact on U.S. GAAP reported
results for the guidance period. U.S. GAAP net cash provided by
operating activities for 2023 is estimated to be between
$2.8 billion and $3.1 billion, with a midpoint of approximately
$2.95 billion. The Company currently
expects to be at the mid-point of the financial guidance
ranges.
(In
billions)
|
|
2023 Guidance Range
(2)
|
|
2023
Midpoint
|
Total
Revenues
|
|
$15.5 -
$16.0
|
|
$15.75
|
Adjusted EBITDA
(1)
|
|
$5.0 - $5.4
|
|
$5.2
|
Free Cash Flow
(1)
|
|
$2.3 - $2.7
|
|
$2.5
|
|
|
(1)
|
Non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional
information.
|
(2)
|
Includes the full year
expected performance for the planned divestitures and excludes any
potential related costs, such as taxes and transaction costs, as
well as any similar costs related to the eye care acquisitions.
Also excludes any acquired IPR&D for unsigned deals.
|
Certain Key Terms and Presentation Matters
New product sales, new product launches or new product revenues:
Refers to revenue from new products launched in 2023 and the
carryover impact of new products, including business development,
launched within the last twelve months.
Operational change: Refers to constant currency percentage
changes and is derived by translating amounts for the current
period at prior year comparative period exchange rates, and in
doing so shows the percentage change from 2023 constant currency
net sales, revenues and adjusted EBITDA to the corresponding amount
in the prior year.
Divestiture adjusted operational change: Refers to operational
changes, further adjusted for the impact of the biosimilars
divestiture in November 2022 by
excluding biosimilars net sales from 2022 periods, and a
reclassification to conform prior year amounts to current year
presentation of divestiture adjusted operational net sales.
SG&A and R&D TSA reimbursement: Expenses related to
TSA services provided to Biocon Biologics are recorded in their
respective functional line item; however, reimbursement of those
expenses plus the mark-up is included in other (income) expense,
net. For comparability purposes, amounts related to the cost
reimbursement are reclassified to adjusted SG&A and adjusted
R&D. This reclassification has no impact on adjusted net
earnings or adjusted EBITDA.
Non-GAAP Financial Measures
This press release includes the presentation and discussion of
certain financial information that differs from what is reported
under accounting principles generally accepted in the United States ("U.S. GAAP"). These
non-GAAP financial measures, including, but not limited to,
adjusted gross profit, adjusted gross margins, adjusted net
earnings, EBITDA, adjusted EBITDA, free cash flow, adjusted R&D
and as a % of total revenues, adjusted SG&A and as a % of total
revenues, adjusted earnings from operations, adjusted interest
expense, adjusted other (income) expense, net, adjusted effective
tax rate, constant currency total revenues, constant currency net
sales, constant currency adjusted EBITDA, 2022 adjusted net sales
ex biosimilars and other, and divestiture adjusted operational
change, are presented in order to supplement investors' and other
readers' understanding and assessment of the financial performance
of Viatris Inc. ("Viatris" or the "Company"). Free cash flow refers
to U.S. GAAP net cash provided by operating activities less capital
expenditures. Management uses these measures internally for
forecasting, budgeting, measuring its operating performance, and
incentive-based awards. Primarily due to acquisitions and other
significant events which may impact comparability of our periodic
operating results, Viatris believes that an evaluation of its
ongoing operations (and comparisons of its current operations with
historical and future operations) would be difficult if the
disclosure of its financial results was limited to financial
measures prepared only in accordance with U.S. GAAP. We believe
that non-GAAP financial measures are useful supplemental
information for our investors and when considered together with our
U.S. GAAP financial measures and the reconciliation to the most
directly comparable U.S. GAAP financial measure, provide a more
complete understanding of the factors and trends affecting our
operations. The financial performance of the Company is measured by
senior management, in part, using adjusted metrics included herein,
along with other performance metrics. In addition, the Company
believes that including EBITDA and supplemental adjustments applied
in presenting adjusted EBITDA is appropriate to provide additional
information to investors to demonstrate the Company's ability to
comply with financial debt covenants and assess the Company's
ability to incur additional indebtedness. The Company also believes
that adjusted EBITDA better focuses management on the Company's
underlying operational results and true business performance and is
used, in part, for management's incentive compensation. We also
report sales performance using the non-GAAP financial measures of
"constant currency", also referred to herein as "operational
change", total revenues, net sales and adjusted EBITDA. These
measures provide information on the change in total revenues, net
sales and adjusted EBITDA assuming that foreign currency exchange
rates had not changed between the prior and current period. The
comparisons presented at constant currency rates reflect
comparative local currency sales at the prior year's foreign
exchange rates. We routinely evaluate our net sales, total revenues
and adjusted EBITDA performance at constant currency so that sales
results can be viewed without the impact of foreign currency
exchange rates, thereby facilitating a period-to-period comparison
of our operational activities, and believe that this presentation
also provides useful information to investors for the same reason.
Divestiture adjusted operational change refers to operational
change, further adjusted for the impact of the biosimilars
divestiture in November 2022 by
excluding biosimilars net sales from 2022 periods, and a
reclassification to conform prior year amounts to current year
presentation of divestiture adjusted operational net sales. The
"Summary of Total Revenues by Segment" table below compares net
sales on an actual and constant currency basis for each reportable
segment for the quarters and six months ended June 30, 2023 and 2022 as well as for total
revenues, as well as divestiture adjusted operational change in net
sales. Also, set forth below, Viatris has provided reconciliations
of such non-GAAP financial measures to the most directly comparable
U.S. GAAP financial measures. Investors and other readers are
encouraged to review the related U.S. GAAP financial measures and
the reconciliations of the non-GAAP measures to their most directly
comparable U.S. GAAP measures set forth below, and investors and
other readers should consider non-GAAP measures only as supplements
to, not as substitutes for or as superior measures to, the measures
of financial performance prepared in accordance with U.S. GAAP. For
additional information regarding the components and uses of
Non-GAAP financial measures refer to Management's Discussion and
Analysis of Financial Condition and Results of Operations--Use of
Non-GAAP Financial Measures section of Viatris' Quarterly Report on
Form 10-Q for the three months ended June
30, 2023.
The Company is not providing forward-looking U.S. GAAP
information for its non-GAAP 2024 Phase 2 outlooks or quantitative
reconciliations with respect to such outlooks to their most
directly comparable U.S. GAAP measures because it is unable to
predict with reasonable certainty the ultimate outcome of certain
significant items, including integration and acquisition-related
expenses, restructuring expenses, asset impairments, litigation
settlements and other contingencies, such as changes to contingent
consideration and certain other gains or losses, including for the
fair value accounting for non-marketable equity investments, as
well as related income tax accounting, because certain of these
items have not occurred, are out of the Company's control and/or
cannot be reasonably predicted without unreasonable effort. These
items are uncertain, depend on various factors, and could have a
material impact on U.S. GAAP reported results for the relevant
periods.
About Viatris
Viatris Inc. (NASDAQ: VTRS) is a global healthcare company
empowering people worldwide to live healthier at every stage of
life. We provide access to medicines, advance sustainable
operations, develop innovative solutions and leverage our
collective expertise to connect more people to more products and
services through our one-of-a-kind Global Healthcare Gateway®.
Formed in November 2020, Viatris
brings together scientific, manufacturing and distribution
expertise with proven regulatory, medical, and commercial
capabilities to deliver high-quality medicines to patients in more
than 165 countries and territories. Viatris' portfolio comprises
more than 1,400 approved molecules across a wide range of
therapeutic areas, spanning both non-communicable and infectious
diseases, including globally recognized brands, complex generic and
branded medicines and a variety of over-the-counter consumer
products. With more than 38,000 colleagues globally, Viatris is
headquartered in the U.S., with global centers in Pittsburgh, Shanghai and Hyderabad, India. Learn more at viatris.com
and investor.viatris.com, and connect with us on Twitter, LinkedIn,
Instagram and YouTube.
Forward-Looking Statements
This release contains "forward-looking statements". These
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may include, without limitation, 2023
financial guidance; reaffirming that full-year total revenues,
adjusted EBITDA and free cash flow are expected to be at midpoint
of 2023 guidance ranges; strong results signal expected beginning
of growth journey; remains on track to announced planned
divestitures in 2023; reported another strong quarter of operating
results which continues to set the Company up well as it prepares
to bring its Phase 1 strategy to an end and position itself for a
strong beginning of Phase 2 in 2024 and beyond; these results
signal what we expect to be the beginning of a growth journey for
Viatris and set us up well for future success; as proud as I am of
our strong performance, the foundation the Company has built and
the stability and predictability we believe have clearly been
achieved, my focus is on the future trajectory of the Company; I'm
pleased to say we believe we are currently on track to announce all
planned divestitures in 2023, including at least one significant
divestiture in the third quarter, possibly more; the Company has
laid out clear capital allocation and business development
priorities for Phase 2 and we are fully dedicated to meeting these
priorities to propel Viatris up the value chain and increase our
return of capital to shareholders; our performance this quarter
highlights our Company's momentum like never before and further
reinforces the predictability in our base business; our strong and
highly diversified business model of bringing access has never
depended on any one product, portfolio or market; we believe this
diversity lays a solid foundation for growth in Phase 2, beginning
in 2024; we continue to execute and are making consistent progress
on our deep pipeline and are on track to meet our full-year 2023
new product revenue target; we continue to prioritize deleveraging
the balance sheet with $6.1 billion
of debt paydown since the beginning of 2021; we are reaffirming our
financial guidance for 2023 as a result of our strong performance
in the first half of the year and the momentum we have going into
the second half; on August 24, 2023;
the Board of Directors declared a quarterly dividend of
twelve cents ($0.12) for each issued and outstanding share of
the Company's common stock payable on September 15, 2023, to shareholders of record at
the close of business on August 24,
2023; on track to achieve approximately $500 million in new product revenues in 2023; the
Company remains fully committed to maintaining its investment grade
credit rating; the goals or outlooks with respect to
the Viatris Inc.'s ("Viatris" or the "Company") strategic
initiatives, including but not limited to the Company's two-phased
strategic vision and potential divestitures and acquisitions; the
benefits and synergies of acquisitions, divestitures or our global
restructuring program; future opportunities for the Company and its
products; and any other statements regarding the Company's future
operations, financial or operating results, capital allocation,
dividend policy and payments, stock repurchases, debt ratio and
covenants, anticipated business levels, future earnings, planned
activities, anticipated growth, market opportunities, strategies,
competitions, commitments, confidence in future results, efforts to
create, enhance or otherwise unlock the value of our unique global
platform, and other expectations and targets for future periods.
Forward-looking statements may often be identified by the use of
words such as "will", "may", "could", "should", "would", "project",
"believe", "anticipate", "expect", "plan", "estimate", "forecast",
"potential", "pipeline", "intend", "continue", "target", "seek" and
variations of these words or comparable words. Because
forward-looking statements inherently involve risks and
uncertainties, actual future results may differ materially from
those expressed or implied by such forward-looking statements.
Factors that could cause or contribute to such differences include,
but are not limited to: the possibility that the Company may be
unable to realize the intended benefits of, or achieve the intended
goals or outlooks with respect to, its strategic initiatives; the
possibility that the Company may be unable to achieve expected
benefits, synergies and operating efficiencies in connection with
acquisitions, divestitures, or its global restructuring program
within the expected timeframe or at all; goodwill or other
impairment charges or other losses related to the divestiture or
sale of businesses or assets; the Company's failure to achieve
expected or targeted future financial and operating performance and
results; the potential impact of public health outbreaks, epidemics
and pandemics, including the ongoing challenges and uncertainties
posed by the COVID-19 pandemic; actions and decisions of healthcare
and pharmaceutical regulators; changes in relevant laws,
regulations and policies and/or the application or implementation
thereof, including but not limited to tax, healthcare and
pharmaceutical laws, regulations and policies globally (including
the impact of recent and potential tax reform in the U.S. and
pharmaceutical product pricing policies in China); the ability to attract and retain key
personnel; the Company's liquidity, capital resources and ability
to obtain financing; any regulatory, legal or other impediments to
the Company's ability to bring new products to market, including
but not limited to "at-risk launches"; success of clinical trials
and the Company's or its partners' ability to execute on new
product opportunities and develop, manufacture and commercialize
products; any changes in or difficulties with the Company's
manufacturing facilities, including with respect to inspections,
remediation and restructuring activities, supply chain or inventory
or the ability to meet anticipated demand; the scope, timing and
outcome of any ongoing legal proceedings, including government
inquiries or investigations, and the impact of any such proceedings
on the Company; any significant breach of data security or data
privacy or disruptions to our information technology systems; risks
associated with having significant operations globally; the ability
to protect intellectual property and preserve intellectual property
rights; changes in third-party relationships; the effect of any
changes in the Company's or its partners' customer and supplier
relationships and customer purchasing patterns, including customer
loss and business disruption being greater than expected following
an acquisition or divestiture; the impacts of competition,
including decreases in sales or revenues as a result of the loss of
market exclusivity for certain products; changes in the economic
and financial conditions of the Company or its partners;
uncertainties regarding future demand, pricing and reimbursement
for the Company's products; uncertainties and matters beyond the
control of management, including but not limited to general
political and economic conditions, inflation rates and global
exchange rates; and inherent uncertainties involved in the
estimates and judgments used in the preparation of financial
statements, and the providing of estimates of financial measures,
in accordance with U.S. GAAP and related standards or on an
adjusted basis. For more detailed information on the risks and
uncertainties associated with Viatris, see the risks described in
Part I, Item 1A of the Company's Annual Report on Form 10-K for the
year ended December 31, 2022, as
amended, and our other filings with the SEC. You can access
Viatris' filings with the SEC through the SEC website at
www.sec.gov or through our website, and Viatris strongly encourages
you to do so. Viatris routinely posts information that may be
important to investors on our website at investor.viatris.com, and
we use this website address as a means of disclosing material
information to the public in a broad, non-exclusionary manner for
purposes of the SEC's Regulation Fair Disclosure (Reg FD). The
contents of our website are not incorporated into this press
release or our filings with the SEC. Viatris undertakes no
obligation to update any statements herein for revisions or changes
after the date of this press release other than as required by
law.
In particular, certain statements in this release relate to
Viatris' Phase 2 strategy in 2024 and beyond and its related goals,
targets, forecasts, objectives and commitments (such statements,
the "Phase 2 Outlooks"). Viatris believes that the assumptions used
as a basis for these Phase 2 Outlooks are reasonable based on the
information available to management at this time. However, this
information is not fact, and you are cautioned not to place undue
reliance on any such information. While certain of these statements
might use language that imply a level of certainty about the
likelihood that Viatris will attain these Phase 2 Outlooks, it is
possible that Viatris will not attain them in the timeframe noted
or at all. These Phase 2 Outlooks reflect assumptions as to certain
business decisions that are subject to change. Important factors
that may affect actual results and cause these Phase 2 Outlooks not
to be achieved, or that may change the underlying variables and
assumptions on which these Phase 2 Outlooks were based and cause
these Phase 2 Outlooks to differ materially, include, but are not
limited to, risks and uncertainties relating to our planned
acquisitions and divestitures, including whether such transactions
are completed on the expected timelines or at all, failure to
achieve the anticipated benefits of any acquisitions or
divestitures, failure to receive the anticipated cash proceeds of
any divestitures, inability to manage base business erosion,
failure to bring new products to market on the expected timeframes
or at all, failure to execute stock repurchases consistent with
current expectations, stock price volatility, higher than
anticipated SG&A, gross margins and R&D spend, industry
performance, interest rate volatility, foreign exchange rates, tax
rates, the regulatory environment and general business and economic
conditions, as well as those set forth in the first paragraph of
"Forward-Looking Statements". In addition, although certain of the
outlooks are presented with numerical specificity, they are still
forward-looking statements that involve inherent risks and
uncertainties. Further, these Phase 2 Outlooks cover multiple years
and such information by its nature becomes less reliable with each
successive year. Accordingly, there can be no assurance that any
aspect of these Phase 2 Outlooks will be realized or that actual
results will not differ materially. Therefore, you should construe
these statements regarding these Phase 2 Outlooks only as goals,
targets and objectives rather than promises of future performance
or absolute statements.
Viatris Inc. and
Subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In millions,
except per share amounts)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$ 3,909.5
|
|
$ 4,105.4
|
|
$ 7,628.6
|
|
$ 8,283.6
|
Other
revenues
|
9.1
|
|
11.4
|
|
19.1
|
|
24.9
|
Total
revenues
|
3,918.6
|
|
4,116.8
|
|
7,647.7
|
|
8,308.5
|
Cost of
sales
|
2,310.0
|
|
2,413.5
|
|
4,496.9
|
|
4,834.0
|
Gross profit
|
1,608.6
|
|
1,703.3
|
|
3,150.8
|
|
3,474.5
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
208.3
|
|
162.6
|
|
391.2
|
|
304.9
|
Acquired
IPR&D
|
10.2
|
|
—
|
|
10.2
|
|
—
|
Selling, general and
administrative
|
1,031.9
|
|
981.1
|
|
1,990.8
|
|
1,896.4
|
Litigation settlements
and other contingencies, net
|
(11.0)
|
|
10.9
|
|
(10.4)
|
|
17.1
|
Total operating
expenses
|
1,239.4
|
|
1,154.6
|
|
2,381.8
|
|
2,218.4
|
Earnings from
operations
|
369.2
|
|
548.7
|
|
769.0
|
|
1,256.1
|
Interest
expense
|
143.7
|
|
145.9
|
|
290.7
|
|
292.1
|
Other (income) expense,
net
|
(107.5)
|
|
13.5
|
|
(177.4)
|
|
47.2
|
Earnings before income
taxes
|
333.0
|
|
389.3
|
|
655.7
|
|
916.8
|
Income tax
provision
|
69.0
|
|
75.4
|
|
167.0
|
|
203.7
|
Net earnings
|
$
264.0
|
|
$
313.9
|
|
$
488.7
|
|
$
713.1
|
Earnings per share
attributable to Viatris Inc. shareholders
|
|
|
|
|
|
|
|
Basic
|
$
0.22
|
|
$
0.26
|
|
$
0.41
|
|
$
0.59
|
Diluted
|
$
0.22
|
|
$
0.26
|
|
$
0.41
|
|
$
0.59
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,199.0
|
|
1,212.3
|
|
1,200.8
|
|
1,211.4
|
Diluted
|
1,203.5
|
|
1,217.1
|
|
1,204.6
|
|
1,215.1
|
Viatris Inc. and
Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
(In
millions)
|
June 30,
2023
|
|
December 31,
2022
|
ASSETS
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
629.2
|
|
$
1,259.9
|
Accounts receivable,
net
|
3,607.3
|
|
3,814.5
|
Inventories
|
3,641.5
|
|
3,519.5
|
Prepaid expenses and
other current assets
|
1,725.1
|
|
1,811.2
|
Assets held for
sale
|
174.9
|
|
230.3
|
Total current
assets
|
9,778.0
|
|
10,635.4
|
Intangible assets,
net
|
22,084.4
|
|
22,607.1
|
Goodwill
|
10,532.5
|
|
10,425.8
|
Other non-current
assets
|
6,300.3
|
|
6,353.9
|
Total assets
|
$
48,695.2
|
|
$
50,022.2
|
LIABILITIES AND
EQUITY
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
1,334.4
|
|
$
1,259.1
|
Other current
liabilities
|
5,189.4
|
|
5,487.1
|
Long-term
debt
|
17,246.0
|
|
18,015.2
|
Other non-current
liabilities
|
4,082.1
|
|
4,188.5
|
Total
liabilities
|
27,851.9
|
|
28,949.9
|
Shareholders'
equity
|
20,843.3
|
|
21,072.3
|
Total liabilities and
equity
|
$
48,695.2
|
|
$
50,022.2
|
Viatris Inc. and
Subsidiaries
|
Key Product Net
Sales, on a Consolidated Basis
|
(Unaudited)
|
|
|
Three months
ended
June 30,
|
|
Six months ended
June 30,
|
(In
millions)
|
2023
|
2022
|
|
2023
|
2022
|
Select Key Global
Products
|
|
|
|
|
|
Lipitor ®
|
$
380.0
|
$
405.6
|
|
$
797.9
|
$ 845.7
|
Norvasc ®
|
182.4
|
203.0
|
|
385.1
|
410.8
|
Lyrica ®
|
137.1
|
155.8
|
|
281.4
|
327.4
|
EpiPen®
Auto-Injectors
|
127.5
|
106.5
|
|
223.3
|
195.3
|
Viagra ®
|
111.0
|
115.1
|
|
226.0
|
244.9
|
Celebrex ®
|
82.0
|
85.9
|
|
170.8
|
171.2
|
Creon ®
|
74.1
|
75.4
|
|
146.8
|
150.1
|
Effexor ®
|
64.8
|
73.7
|
|
129.4
|
151.2
|
Zoloft ®
|
54.5
|
62.5
|
|
111.0
|
135.6
|
Xalabrands
|
50.4
|
42.7
|
|
97.1
|
95.7
|
|
|
|
|
|
|
Select Key Segment
Products
|
|
|
|
|
|
Dymista ®
|
$
57.7
|
$
55.5
|
|
$
110.9
|
$ 99.4
|
Yupelri ®
|
55.0
|
49.1
|
|
102.0
|
92.7
|
Xanax ®
|
51.8
|
37.2
|
|
91.5
|
77.2
|
Amitiza ®
|
41.5
|
44.1
|
|
78.1
|
85.9
|
____________
|
(a)
|
The Company does not
disclose net sales for any products considered competitively
sensitive.
|
(b)
|
Products disclosed may
change in future periods, including as a result of seasonality,
competition or new product launches.
|
(c)
|
Amounts for the three
and six months ended June 30, 2023 include the unfavorable impact
of foreign currency translations compared to the prior year
period.
|
Viatris Inc. and
Subsidiaries
Reconciliation of
Non-GAAP Financial Measures
(Unaudited)
|
|
Reconciliation of
U.S. GAAP Net Earnings to Adjusted Net Earnings
|
|
Below is a
reconciliation of U.S. GAAP net earnings to adjusted net earnings
for the three and six months ended June 30, 2023 compared
to the prior
year periods:
|
|
|
Three Months
Ended June
30,
|
Six Months Ended
June
30,
|
(In
millions)
|
2023
|
|
2022
|
2023
|
|
2022
|
U.S. GAAP net
earnings
|
$
264.0
|
|
$
313.9
|
|
$
488.7
|
|
$
713.1
|
Purchase accounting
related amortization (primarily included in cost of sales)
(a)
|
609.3
|
|
644.9
|
|
1,262.6
|
|
1,303.8
|
Litigation settlements
and other contingencies, net
|
(11.0)
|
|
10.9
|
|
(10.4)
|
|
17.1
|
Interest expense
(primarily amortization of premiums and discounts on long term
debt)
|
(10.5)
|
|
(13.1)
|
|
(20.8)
|
|
(26.8)
|
Clean energy
investments pre-tax gain
|
—
|
|
0.1
|
|
—
|
|
—
|
Acquisition and
divestiture related costs (primarily included in SG&A)
(b)
|
56.3
|
|
122.4
|
|
114.4
|
|
207.1
|
Restructuring related
costs (c)
|
74.1
|
|
10.2
|
|
83.8
|
|
27.0
|
Share-based
compensation expense
|
39.2
|
|
29.4
|
|
81.8
|
|
57.7
|
Other special items
included in:
|
|
|
|
|
|
|
|
Cost of sales
(d)
|
36.4
|
|
40.5
|
|
75.2
|
|
81.5
|
Research and
development expense
|
0.4
|
|
0.6
|
|
2.4
|
|
0.9
|
Selling, general and
administrative expense
|
16.4
|
|
17.0
|
|
31.3
|
|
24.4
|
Other income, net
(e)
|
(65.8)
|
|
(0.4)
|
|
(87.6)
|
|
(1.9)
|
Tax effect of the above
items and other income tax related items (f)
|
(103.4)
|
|
(111.1)
|
|
(183.1)
|
|
(213.3)
|
Adjusted net
earnings
|
$
905.4
|
|
$ 1,065.3
|
|
$
1,838.3
|
|
$
2,190.6
|
____________
|
Significant items
include the following:
|
(a)
|
For the six
months ended June 30, 2023, charges include an intangible
asset charge of approximately $32.0 million related to the
potential divestiture of select geographic markets that were part
of Mylan N.V. combining with Pfizer Inc.'s off-patent branded and
generic established medicines business in a Reverse Morris Trust
transaction to form Viatris on November 16, 2020 (the
"Combination") that are smaller in nature and in which we had no
established infrastructure prior to or following the Combination
and that the Company intends to divest (the "Upjohn Distributor
Markets") to write down the disposal group to fair value, less cost
to sell. Also includes amortization of the step-up in the fair
value of inventory related to the Oyster Point Pharma Inc.
acquisition of approximately $7.3 million and $14.7 million,
for the three and six months ended June 30, 2023,
respectively.
|
(b)
|
Acquisition and
divestiture related costs consist primarily of transaction costs
including legal and consulting fees and integration
activities.
|
(c)
|
For the three and six
months ended June 30, 2023, charges include approximately
$68.9 million and $79.8 million, respectively, in cost of sales and
approximately $5.2 million and $4.0 million, respectively, in
SG&A.
|
(d)
|
For the three and six
months ended June 30, 2023, charges include incremental
manufacturing variances at plants in the 2020 restructuring program
of approximately $12.9 million and $35.6 million,
respectively, and charges related to the potential divestiture of
the Upjohn Distributor Markets of approximately $10.0 million
and $19.2 million, respectively.
|
(e)
|
For the three months
ended June 30, 2023, includes gains of approximately
$74.5 million as a result of remeasuring our non-marketable
equity investments to fair value, including our equity interest in
Mapi Pharma Ltd. ("Mapi") and the compulsory convertible preferred
shares ("CCPS") in Biocon Biologics Limited ("Biocon Biologics").
For the six months ended June 30, 2023, includes gains of
approximately $96.0 million as a result of remeasuring our
non-marketable equity investments to fair value, including our
equity interests in Mapi and Famy Life Sciences Private Limited
("Famy Life Sciences") and the CCPS in Biocon Biologics.
|
(f)
|
Adjusted for changes
for uncertain tax positions.
|
Reconciliation of
U.S. GAAP Net Earnings to EBITDA and Adjusted
EBITDA
|
|
Below is a
reconciliation of U.S. GAAP net earnings to EBITDA and adjusted
EBITDA for the three and six months ended June 30, 2023,
compared to
the prior year periods:
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP net
earnings
|
$
264.0
|
|
$
313.9
|
|
$
488.7
|
|
$
713.1
|
Add
adjustments:
|
|
|
|
|
|
|
|
Net contribution
attributable to equity method investments
|
—
|
|
0.1
|
|
—
|
|
—
|
Income tax
provision
|
69.0
|
|
75.4
|
|
167.0
|
|
203.7
|
Interest expense
(a)
|
143.7
|
|
145.9
|
|
290.7
|
|
292.1
|
Depreciation and
amortization (b)
|
686.7
|
|
722.3
|
|
1,416.7
|
|
1,458.3
|
EBITDA
|
$ 1,163.4
|
|
$ 1,257.6
|
|
$ 2,363.1
|
|
$ 2,667.2
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
39.2
|
|
29.4
|
|
81.8
|
|
57.7
|
Litigation settlements
and other contingencies, net
|
(11.0)
|
|
10.9
|
|
(10.4)
|
|
17.1
|
Restructuring,
acquisition and divestiture related and other special items
(c)
|
114.1
|
|
184.2
|
|
212.1
|
|
326.4
|
Adjusted
EBITDA
|
$ 1,305.7
|
|
$ 1,482.1
|
|
$ 2,646.6
|
|
$ 3,068.4
|
___________
|
(a)
|
Includes amortization
of premiums and discounts on long-term debt.
|
(b)
|
Includes purchase
accounting related amortization.
|
(c)
|
See items detailed in
the Reconciliation of U.S. GAAP Net Earnings to Adjusted Net
Earnings.
|
Summary of Total
Revenues by Segment
|
|
|
Three Months
Ended
|
|
June
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
Currency
Impact (1)
|
|
2023
Constant
Currency
Revenues
|
|
Constant
Currency
%
Change
(2)
|
|
2022
Biosimilars
(3)
|
|
Other
(4)
|
|
2022
Adjusted
Ex
Biosimilars
and Other
(5)
|
|
Divestiture
Adjusted
Operational
Change (6)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
$ 2,353.8
|
|
$ 2,479.1
|
|
(5) %
|
|
$ (11.9)
|
|
$
2,341.9
|
|
(6) %
|
|
$
142.0
|
|
$
13.9
|
|
$ 2,323.2
|
|
1 %
|
Greater
China
|
532.1
|
|
548.3
|
|
(3) %
|
|
26.3
|
|
558.4
|
|
2 %
|
|
0.3
|
|
(4.2)
|
|
552.2
|
|
1 %
|
JANZ
|
375.5
|
|
427.1
|
|
(12) %
|
|
25.2
|
|
400.7
|
|
(6) %
|
|
5.0
|
|
(9.7)
|
|
431.8
|
|
(7) %
|
Emerging
Markets
|
648.1
|
|
650.9
|
|
— %
|
|
52.0
|
|
700.1
|
|
8 %
|
|
14.5
|
|
—
|
|
636.4
|
|
10 %
|
Total net
sales
|
$ 3,909.5
|
|
$ 4,105.4
|
|
(5) %
|
|
$ 91.6
|
|
$
4,001.1
|
|
(3) %
|
|
$
161.8
|
|
$ —
|
|
$ 3,943.6
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(7)
|
9.1
|
|
11.4
|
|
NM
|
|
—
|
|
9.1
|
|
NM
|
|
|
|
|
|
|
|
|
Consolidated total
revenues (8)
|
$ 3,918.6
|
|
$ 4,116.8
|
|
(5) %
|
|
$ 91.6
|
|
$
4,010.2
|
|
(3) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
June
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
Currency
Impact (1)
|
|
2023
Constant
Currency
Revenues
|
|
Constant
Currency
%
Change
(2)
|
|
2022
Biosimilars
(3)
|
|
Other
(4)
|
|
2022
Adjusted
Ex
Biosimilars
and Other
(5)
|
|
Divestiture
Adjusted
Operational
Change (6)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
$ 4,524.2
|
|
$ 4,955.2
|
|
(9) %
|
|
$ 61.3
|
|
$
4,585.6
|
|
(7) %
|
|
$
286.6
|
|
$
13.9
|
|
$ 4,654.7
|
|
(1) %
|
Greater
China
|
1,096.7
|
|
1,121.4
|
|
(2) %
|
|
61.3
|
|
1,158.0
|
|
3 %
|
|
0.4
|
|
(4.2)
|
|
1,125.2
|
|
3 %
|
JANZ
|
717.7
|
|
850.9
|
|
(16) %
|
|
58.8
|
|
776.4
|
|
(9) %
|
|
9.6
|
|
(9.7)
|
|
851.0
|
|
(9) %
|
Emerging
Markets
|
1,290.0
|
|
1,356.1
|
|
(5) %
|
|
107.3
|
|
1,397.3
|
|
3 %
|
|
30.0
|
|
—
|
|
1,326.1
|
|
5 %
|
Total net
sales
|
$ 7,628.6
|
|
$ 8,283.6
|
|
(8) %
|
|
$ 288.7
|
|
$
7,917.3
|
|
(4) %
|
|
$
326.6
|
|
$ —
|
|
$ 7,957.0
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(7)
|
19.1
|
|
24.9
|
|
NM
|
|
0.4
|
|
19.5
|
|
NM
|
|
|
|
|
|
|
|
|
Consolidated total
revenues (8)
|
$ 7,647.7
|
|
$ 8,308.5
|
|
(8) %
|
|
$ 289.1
|
|
$
7,936.8
|
|
(4) %
|
|
|
|
|
|
|
|
|
____________
|
(1)
|
Currency impact is
shown as unfavorable (favorable).
|
(2)
|
The constant currency
percentage change is derived by translating net sales or revenues
for the current period at prior year comparative period exchange
rates, and in doing so shows the percentage change from 2023
constant currency net sales or revenues to the corresponding amount
in the prior year.
|
(3)
|
Represents biosimilars
net sales in the relevant period.
|
(4)
|
Represents a
reclassification to conform prior year amounts to current year
presentation of divestiture adjusted operational net
sales.
|
(5)
|
Represents U.S. GAAP
net sales minus 2022 biosimilars net sales for the relevant period
and a reclassification.
|
(6)
|
See "Certain Key Terms
and Presentation Matters" in this release for more
information.
|
(7)
|
For the three months
ended June 30, 2023, other revenues in Developed Markets, JANZ, and
Emerging Markets were approximately $6.0 million,
$0.4 million, and $2.7 million, respectively. For the six
months ended June 30, 2023, other revenues in Developed Markets,
JANZ, and Emerging Markets were approximately $13.1 million,
$0.6 million, and $5.4 million, respectively.
|
(8)
|
Amounts exclude
intersegment revenue which eliminates on a consolidated
basis.
|
Reconciliation of
Income Statement Line Items
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP cost of
sales
|
$
2,310.0
|
|
$ 2,413.5
|
|
$ 4,496.9
|
|
$ 4,834.0
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
related amortization
|
(609.3)
|
|
(644.9)
|
|
(1,262.7)
|
|
(1,303.7)
|
Acquisition and
divestiture related items
|
(7.6)
|
|
(15.8)
|
|
(12.6)
|
|
(24.8)
|
Restructuring related
costs
|
(68.9)
|
|
(6.7)
|
|
(79.8)
|
|
(19.8)
|
Share-based
compensation expense
|
(0.9)
|
|
(0.5)
|
|
(1.5)
|
|
(0.8)
|
Other special
items
|
(36.4)
|
|
(40.5)
|
|
(75.2)
|
|
(81.5)
|
Adjusted cost of
sales
|
$
1,586.9
|
|
$ 1,705.1
|
|
$ 3,065.1
|
|
$ 3,403.4
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
2,331.7
|
|
$ 2,411.7
|
|
$ 4,582.6
|
|
$ 4,905.1
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
60 %
|
|
59 %
|
|
60 %
|
|
59 %
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP
R&D
|
$
208.3
|
|
$
162.6
|
|
$
391.2
|
|
$
304.9
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition and
divestiture related costs
|
(5.0)
|
|
(1.7)
|
|
(7.0)
|
|
(3.7)
|
Share-based
compensation expense
|
(0.9)
|
|
(1.6)
|
|
(2.5)
|
|
(3.0)
|
SG&A and R&D
TSA reimbursement (d)
|
(8.1)
|
|
—
|
|
(18.4)
|
|
—
|
Other special
items
|
(0.4)
|
|
(0.6)
|
|
(2.4)
|
|
(0.9)
|
Adjusted
R&D
|
$
193.9
|
|
$
158.7
|
|
$
360.9
|
|
$
297.3
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
5 %
|
|
4 %
|
|
5 %
|
|
4 %
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP
SG&A
|
$ 1,031.9
|
|
$
981.1
|
|
$ 1,990.8
|
|
$ 1,896.4
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition and
divestiture related costs
|
(43.6)
|
|
(104.7)
|
|
(94.7)
|
|
(178.5)
|
Restructuring and
related costs
|
(5.2)
|
|
(3.5)
|
|
(4.0)
|
|
(7.2)
|
Purchase accounting
amortization and other related items
|
—
|
|
—
|
|
—
|
|
(0.1)
|
Share-based
compensation expense
|
(37.5)
|
|
(27.5)
|
|
(77.8)
|
|
(54.0)
|
SG&A and R&D
TSA reimbursement (d)
|
(27.8)
|
|
—
|
|
(52.2)
|
|
—
|
Other special items
and reclassifications
|
(16.4)
|
|
(17.0)
|
|
(31.3)
|
|
(24.4)
|
Adjusted
SG&A
|
$
901.4
|
|
$
828.4
|
|
$ 1,730.8
|
|
$ 1,632.2
|
|
|
|
|
|
|
|
|
Adjusted SG&A as %
of total revenues
|
23 %
|
|
20 %
|
|
23 %
|
|
20 %
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP total
operating expenses
|
$ 1,239.4
|
|
$ 1,154.6
|
|
$ 2,381.8
|
|
$ 2,218.4
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Litigation settlements
and other contingencies, net
|
11.0
|
|
(10.9)
|
|
10.4
|
|
(17.1)
|
R&D
adjustments
|
(14.4)
|
|
(3.9)
|
|
(30.3)
|
|
(7.6)
|
SG&A
adjustments
|
(130.5)
|
|
(152.7)
|
|
(260.0)
|
|
(264.2)
|
Adjusted total
operating expenses
|
$ 1,105.5
|
|
$
987.1
|
|
$ 2,101.9
|
|
$ 1,929.5
|
|
|
|
|
|
|
|
|
Adjusted earnings from
operations (b)
|
$ 1,226.2
|
|
$ 1,424.6
|
|
$ 2,480.7
|
|
$ 2,975.6
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP interest
expense
|
$
143.7
|
|
$
145.9
|
|
$
290.7
|
|
$
292.1
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Accretion of
contingent consideration liability
|
(2.1)
|
|
(1.8)
|
|
(4.3)
|
|
(3.8)
|
Amortization of
premiums and discounts on long-term debt
|
13.6
|
|
16.1
|
|
27.1
|
|
32.9
|
Other special
items
|
(1.0)
|
|
(1.1)
|
|
(2.0)
|
|
(2.2)
|
Adjusted interest
expense
|
$
154.2
|
|
$
159.1
|
|
$
311.5
|
|
$
319.0
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP other
(income) expense, net
|
$ (107.5)
|
|
$
13.5
|
|
$ (177.4)
|
|
$
47.2
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Clean energy
investments pre-tax gain (c)
|
—
|
|
(0.1)
|
|
—
|
|
—
|
Fair Value adjustments
on equity investments (e)
|
74.5
|
|
—
|
|
96.0
|
|
—
|
SG&A and R&D
TSA reimbursement (d)
|
35.9
|
|
—
|
|
70.6
|
|
—
|
Other items
|
(8.7)
|
|
0.4
|
|
(8.4)
|
|
1.9
|
Adjusted other (income)
expense, net
|
$
(5.8)
|
|
$
13.8
|
|
$
(19.2)
|
|
$
49.1
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP earnings
before income taxes
|
$
333.0
|
|
$
389.3
|
|
$
655.7
|
|
$
916.8
|
Total pre-tax non-GAAP
adjustments
|
744.8
|
|
862.5
|
|
1,532.7
|
|
1,690.8
|
Adjusted earnings
before income taxes
|
$ 1,077.8
|
|
$ 1,251.8
|
|
$ 2,188.4
|
|
$ 2,607.6
|
|
|
|
|
|
|
|
|
U.S. GAAP income tax
provision
|
$
69.0
|
|
$
75.4
|
|
$
167.0
|
|
$
203.7
|
Adjusted tax
expense
|
103.4
|
|
111.1
|
|
183.1
|
|
213.3
|
Adjusted income tax
provision
|
$
172.4
|
|
$
186.5
|
|
$
350.1
|
|
$
417.0
|
|
|
|
|
|
|
|
|
Adjusted effective tax
rate
|
16.0 %
|
|
14.9 %
|
|
16.0 %
|
|
16.0 %
|
___________
|
(a)
|
U.S. GAAP gross profit
is calculated as total revenues less U.S. GAAP cost of sales. U.S.
GAAP gross margin is calculated as U.S. GAAP gross profit divided
by total revenues. Adjusted gross profit is calculated as total
revenues less adjusted cost of sales. Adjusted gross margin is
calculated as adjusted gross profit divided by total
revenues.
|
(b)
|
U.S. GAAP earnings from
operations is calculated as U.S. GAAP gross profit less U.S. GAAP
total operating expenses. Adjusted earnings from operations is
calculated as adjusted gross profit less adjusted total operating
expenses.
|
(c)
|
Adjustment represents
exclusion of activity related to Viatris' clean energy investments,
the activities of which qualify for income tax credits under
section 45 of the U.S. Internal Revenue Code of 1986, as
amended.
|
(d)
|
Refer to "Certain Key
Terms and Presentation Matters" section in this release for more
information on reclassifications related to TSA
reimbursements.
|
(e)
|
For the three months
ended June 30, 2023, includes gains of approximately
$74.5 million as a result of remeasuring our non-marketable
equity interest in Mapi and the CCPS in Biocon Biologics to fair
value. For the six months ended June 30, 2023, includes gains
of approximately $96.0 million as a result of remeasuring our
non-marketable equity interests in Mapi and Famy Life Sciences and
the CCPS in Biocon Biologics to fair value.
|
Reconciliation of
Estimated 2023 U.S. GAAP Net Cash Provided by Operating Activities
to Free Cash Flow
(Unaudited)
|
|
A reconciliation of
the estimated 2023 U.S. GAAP Net Cash provided by Operating
Activities to Free Cash Flow is presented below:
|
|
(In
millions)
|
|
Estimated U.S. GAAP Net
Cash provided by Operating Activities (a)
|
$2,800 -
$3,100
|
|
|
Less: Capital
Expenditures
|
$(400) -
$(500)
|
|
|
Free Cash Flow
(a)
|
$2,300 -
$2,700
|
___________
|
(a)
|
Includes the full year
expected performance for the planned divestitures and excludes any
potential related costs, such as taxes and transaction costs, as
well as any similar costs related to the eye care acquisitions.
Also excludes any acquired IPR&D for unsigned deals.
|
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SOURCE Viatris Inc.