PITTSBURGH, May 10, 2021 /PRNewswire/ --
- Reports First Quarter 2021 Financial Results - Total Revenue of
$4.4 billion, U.S. GAAP net loss of
$1.0 billion, Adjusted EBITDA of
$1.6 billion, U.S. GAAP net cash
provided by operating activities of $849
million, Free cash flow of $799
million
- Board of Directors Declares a Quarterly Dividend of
Eleven Cents ($0.11) per Share
- Generates $163 Million in New
Product Revenue in the First Quarter
- Continues Solid Progress in Advancing Key Pipeline
Programs
- Remains on Track to Achieve Approximately $500 Million in Synergies in 2021
- Reaffirms Financial Guidance for 2021
Viatris Inc. (NASDAQ: VTRS) today reported results for the
first quarter of 2021, which demonstrate the strength of its
differentiated operating platform and commercial capabilities, its
broad and diverse product portfolio and its strong R&D
platform.
Viatris also announced that its Board of Directors declared a
quarterly dividend of eleven cents
($0.11) for each issued and
outstanding share of the company's common stock. The dividend is
payable on June 26, 2021 to
stockholders of record at the close of business on May 24, 2021.
Executive Comments
Michael Goettler, Chief Executive
Officer stated: "Our strong first-quarter performance across
revenue, adjusted EBITDA and free cash flow highlights the
diversified and robust business profile that differentiates Viatris
as a company. We see underlying strength in our business and we are
reaffirming guidance for 2021, which incorporates known and
potential headwinds and tailwinds for the remainder of the year. At
the conclusion of the second quarter, we will be reassessing our
guidance for the full year."
Rajiv Malik, President, stated:
"We are off to a strong start to the year as we successfully
execute on our 2021 business plan priorities – manage our base
business, deliver on our new launches, integrate and synergize. Our
broad-based, diverse global portfolio drove strong quarterly
performance across all four segments and all three product
categories. We remain confident in our ability to optimize the
one-of-a-kind platform we have built. We are encouraged that our
new product launches delivered revenue of $163 million for the quarter and remain on track
to meet our $690 million target in
new product launch revenue for the year. We are also on track to
realize approximately $500 million of
cost synergies this year."
Sanjeev Narula, Chief Financial
Officer, stated: "I am pleased with our strong execution in the
quarter and our focused delivery of our financial commitments,
including the declaration of our inaugural quarterly dividend and
the enhanced disclosures with which we are reporting our results.
During the first quarter, we generated $799
million of free cash flow, primarily driven by solid net
cash provided by operating activities and the timing of spend. We
remain focused on our capital allocation priorities and maintaining
our investment grade credit rating."
Financial Summary
|
Three Months
Ended
|
|
March
31,
|
(Unaudited; in
millions, except per share amounts and %s)
|
2021
|
|
2020
|
|
Reported
Change(1)
|
|
Combined
Adjusted
Operational
Change(2)(3)
|
|
Combined
LOE
Adjusted
Operational
Change(2)(3)
|
Total Net
Sales
|
$
|
4,400.1
|
|
|
$
|
2,588.2
|
|
|
70%
|
|
(6)%
|
|
(2)%
|
Developed
Markets
|
2,571.6
|
|
|
1,986.4
|
|
|
29%
|
|
(5)%
|
|
(5)%
|
Emerging
Markets
|
754.7
|
|
|
343.5
|
|
|
120%
|
|
(5)%
|
|
(5)%
|
JANZ
|
481.9
|
|
|
243.2
|
|
|
98%
|
|
(25)%
|
|
14%
|
Greater
China
|
591.9
|
|
|
15.1
|
|
|
nm
|
|
9%
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$
|
2,724.6
|
|
|
$
|
1,061.5
|
|
|
157%
|
|
(8)%
|
|
(1)%
|
Complex Gx and
Biosimilars
|
328.9
|
|
|
253.3
|
|
|
30%
|
|
27%
|
|
27%
|
Generics
|
1,346.6
|
|
|
1,273.4
|
|
|
6%
|
|
(8)%
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$
|
1,127.3
|
|
|
$
|
906.1
|
|
|
24%
|
|
|
|
|
U.S. GAAP Gross
Margin
|
25.4
|
%
|
|
34.6
|
%
|
|
|
|
|
|
|
Adjusted Gross Profit
(4)
|
$
|
2,639.9
|
|
|
$
|
1,380.4
|
|
|
91%
|
|
|
|
|
Adjusted Gross Margin
(4)
|
59.6
|
%
|
|
52.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net (Loss)
Earnings
|
$
|
(1,037.6)
|
|
|
$
|
20.8
|
|
|
nm
|
|
|
|
|
Adjusted Net Earnings
(4)
|
$
|
1,116.4
|
|
|
$
|
467.2
|
|
|
139%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(4)
|
$
|
1,168.1
|
|
|
$
|
582.9
|
|
|
100%
|
|
|
|
|
Adjusted EBITDA
(4)
|
$
|
1,636.6
|
|
|
$
|
750.7
|
|
|
118%
|
|
(10)%
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$
|
848.8
|
|
|
$
|
291.1
|
|
|
192%
|
|
|
|
|
Capital
expenditures
|
49.5
|
|
|
43.4
|
|
|
|
|
|
|
|
Free cash flow
(4)
|
$
|
799.3
|
|
|
$
|
247.7
|
|
|
223%
|
|
|
|
|
|
___________
|
(1)
|
Q1 2020 represents
Mylan standalone results for Q1 2020. Mylan was the accounting
acquiror in the combination of Mylan N.V. with Pfizer Inc.'s Upjohn
business (the "Combination) and therefore the historical financial
statements of Mylan for periods prior to the combination are
considered to be the historical financial statements of
Viatris.
|
(2)
|
Represents
operational change for net sales. See "Certain Key Terms" in this
release for more information.
|
(3)
|
See "Certain Key
Terms" for more information about Combined Adjusted Q1 2020 results
and Combined LOE Adjusted Q1 2020 results.
|
(4)
|
Non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional
information.
|
First Quarter Highlights
- First quarter 2021 net sales totaled $4.40 billion, down 6% compared to combined
adjusted Q1 2020 results, but only down 2% compared to combined LOE
adjusted Q1 2020 results driven by solid performance across all
four of our segments—Developed Markets, Emerging Markets, JANZ
(Japan, Australia and New
Zealand), and Greater
China.
- Brands performed better than expectations, driven by products
such as EpiPen®, Amitiza®, Lipitor® and Viagra®.
- Complex Generics and Biosimilars grew by 27% compared to
combined adjusted Q1 2020 results, largely driven by Pegfilgrastim,
Trastuzumab and Adalimumab biosimilars.
- Generics, which include diversified product forms such as
extended-release oral solids, injectables, transdermals and
topicals, performed in line with expectations, including for the
impact of COVID-19 in Q1 2021.
- The company generated $163
million in new product revenue primarily driven by the
Thrombosis portfolio in the Developed Markets segment and is on
track to meet $690 million in
consolidated new product revenue in 2021.
- The company generated $799
million of free cash flow, primarily driven by solid U.S.
GAAP net cash provided by operating activities of $849 million and the timing of planned capital
expenditures.
- Continued solid progress in advancing key pipeline programs for
biosimilars, complex products and complex injectables.
Integration and Restructuring
- Workforce actions related to the company's previously announced
global restructuring program are well underway.
- Plans to close, downsize or divest 13 manufacturing sites are
in process. As always, the company is committed to ensuring supply
continuity so that patients' needs for critical medicines are
met.
- The company remains on track to realize approximately
$500 million of cost synergies this
year.
Capital Allocation
- The Viatris Board of Directors declared a quarterly dividend of
eleven cents ($0.11) per share.
- The company paid down $1.06
billion in short-term debt in the quarter, continues to
target approximately $6.5 billion of
debt repayment through 2023, and remains fully committed to
maintaining its investment grade credit rating.
COVID-19 Response
- The company continues to support the health and safety of
colleagues and their families around the world as a top
priority.
- Viatris has ramped up production of antiviral medicines,
including remdesivir, and continues to work with government
authorities in India to further
reduce the cost of the medicines and educate more than 20,000
healthcare professionals about product usage as the country works
to overcome its current COVID outbreak.
- Viatris has a broad, diverse and resilient global manufacturing
and supply chain footprint. The company is not dependent on any one
country or site. Even in India,
the company's manufacturing footprint is spread over five different
states, which mitigates the risk of disruption in any given part of
the country.
Commitment to Sustainability
- The company published its inaugural Sustainability Report
reinforcing its strong foundation in corporate social
responsibility and commitment to doing its part to address some of
the world's most pressing health needs by providing sustainable
access to high-quality medicine, regardless of geography or
circumstance. The report provides a comprehensive, enterprise-wide
overview of Viatris' operations as they relate to environmental,
social and governance (ESG) matters and outlines efforts from the
past year across five key areas of impact: patient health, employee
health, environmental health, global public health and community
health. The report also includes a deeper look at Viatris' role in
the fight against COVID-19.
https://www.viatris.com/en/About-Us/Corporate-Responsibility
Reaffirming 2021 Financial Guidance
Viatris is reaffirming financial guidance for 2021 as set forth
below. The Company is not providing forward-looking guidance for
U.S. GAAP net loss or a quantitative reconciliation of its 2021
adjusted EBITDA guidance to the most directly comparable U.S. GAAP
measure, U.S. GAAP net loss, 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, 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 2021 is
estimated to be between $2.65 billion
and $2.8 billion, with a midpoint of
$2.73 billion.
2021 Financial Guidance
|
|
Range
(Billions)
|
|
Midpoint
(Billions)
|
Total
Revenue
|
|
$17.2 -
$17.8
|
|
$17.5
|
Adjusted EBITDA
(1)
|
|
$6.0 -
$6.4
|
|
$6.2
|
Free Cash Flow
(1)
|
|
$2.0 -
$2.3
|
|
$2.15
|
|
(1)
|
Non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional
information.
|
Conference Call and Earnings Materials
Viatris Inc. will host a conference call and live webcast, today
at 10:00 a.m. ET, to review the
Company's financial results for the first quarter ended
March 31, 2021. Investors and the
general public are invited to listen to a live webcast of the call
at investor.viatris.com or by calling 855.493.3607 or 346.354.0950
for international callers (ID#: 3557756). The "Viatris Q1 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.
Certain Key Terms
The combined measures described herein are calculated as
indicated, are reflected as approximations and/or with rounding,
and do not reflect pro forma results in accordance with ASC 805 or
Article 11 of Regulation S-X. Such measures also do not reflect the
effect of any purchase accounting adjustments, including but not
limited to the elimination of intercompany sales and the fair value
of assets and liabilities. Viatris believes these combined 2020
measures provide useful information to understanding and assessing
our 2021 performance because they include both Mylan and Upjohn
business results, adjusted as set forth below, whereas historical
financial information of Viatris prior to November 16, 2020 only represents Mylan's
historical results as Mylan is considered the accounting acquiror
of the Upjohn business.
Combined Adjusted Q1 2020 results refer to the sum of
Mylan's standalone results and the standalone carve-out results
from the Upjohn Business for the period from January 1, 2020 to March
31, 2020, adjusted for product divestitures in connection
with the Combination and sales to Pfizer for pharmaceutical
products provided under its U.S. healthcare plan.
Combined LOE Adjusted Q1 2020 results refer to Combined
Adjusted Q1 2020 results, adjusted for the impact of loss of
exclusivity ("LOE") of Lyrica and Celebrex in Japan which occurred after Q1 2020.
New product sales, new product launches or new product
revenues refer to revenue from new products launched in 2021
and the carryover impact of new products, including business
development, launched since April 1,
2020 (e.g., acquisition of Aspen's thrombosis business in 2020).
Operational change refers to constant currency percentage
change and 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 2021 constant currency
net sales or revenues to the corresponding amount in the prior
year.
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, adjusted EBITDA margin, 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 expense
(income), adjusted effective tax rate, notional debt to Credit
Agreement Adjusted EBITDA leverage ratio, long-term average debt to
Credit Agreement Adjusted EBITDA leverage ratio target,
constant currency total revenues and constant currency net sales
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. Adjusted EBITDA margin refers to adjusted EBITDA
divided by total revenues. 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 and Credit Agreement Adjusted EBITDA
(as defined below) pursuant to our Credit Agreement 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 and net sales.
These measures provide information on the change in total revenues
and net sales 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 and total revenues 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. 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 ended
March 31, 2021 and 2020 as well as
for total revenues. 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 March 31, 2021
(the "Form 10-Q").
About Viatris
Viatris Inc. (NASDAQ: VTRS) is a new kind of 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, a growing portfolio of biosimilars and a variety
of over-the-counter consumer products. With a global workforce of
over 40,000, 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 at
@ViatrisInc, LinkedIn 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,
reaffirming Viatris' 2021 guidance, remaining on track to achieve
approximately $500 million in
synergies in 2021, that we see underlying strength in our business
and we are reaffirming guidance for 2021 which incorporates
known and potential headwinds and tailwinds for the remainder of
the year, that at the conclusion of the second quarter we will be
reassessing our guidance for the full year, that we remain
confident in our ability to optimize the one-of-a-kind platform we
have built, that we remain on track to meet our $690 million target in new product launch revenue
for the year, that we remain focused on our capital allocation
priorities and maintaining our investment grade credit rating, that
there is continued solid progress in advancing key pipeline
programs for biosimilars, complex products and complex injectables,
that plans to close, downsize or divest 13 manufacturing sites are
in process, that we are committed to ensuring supply continuity so
that patients' needs for critical medicines are met, that the
Company continues to target approximately $6.5 billion of debt repayment through 2023, that
Viatris has ramped up production of antiviral medicines, including
remdesivir, and continues to work with government authorities in
India to further reduce the cost
of the medicines and educate more than 20,000 healthcare
professionals about product usage as the country works to overcome
its current COVID outbreak and statements about the transaction
pursuant to which Mylan N.V. ("Mylan") combined with Pfizer Inc.'s
Upjohn business (the "Upjohn Business") in a Reverse Morris Trust
transaction (the "Combination") and Upjohn Inc. became the parent
entity of the combined Upjohn Business and Mylan business and was
renamed "Viatris Inc." ("Viatris" or the "Company"), the benefits
and synergies of the Combination 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, debt ratio and covenants, anticipated business levels,
future earnings, planned activities, anticipated growth, market
opportunities, strategies, competitions, 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 integration of Mylan and the Upjohn
Business or the implementation of the Company's global
restructuring program being more difficult, time consuming or
costly than expected; the possibility that the Company may be
unable to achieve expected benefits, synergies and operating
efficiencies in connection with the Combination or its global
restructuring program within the expected timeframe or at all; the
possibility that the Company may be unable to successfully
integrate Mylan and the Upjohn Business or implement its global
restructuring program; operational or financial difficulties or
losses associated with the Company's reliance on agreements with
Pfizer in connection with the Combination, including with respect
to transition services; the possibility that the Company may
be unable to achieve all intended benefits of its strategic
initiatives; the potential impact of public health outbreaks,
epidemics and pandemics, including the ongoing challenges and
uncertainties posed by the COVID-19 pandemic; the Company's failure
to achieve expected or targeted future financial and operating
performance and results; actions and decisions of healthcare and
pharmaceutical regulators; changes in relevant laws and
regulations, including but not limited to changes in tax,
healthcare and pharmaceutical laws and regulations globally; 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 the
Combination; 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 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 in the 2020 Form 10-K, 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 release or our other filings with the SEC.
Viatris undertakes no obligation to update any statements herein
for revisions or changes after the date of this release other than
as required by law.
Viatris Inc. and
Subsidiaries
|
Condensed
Consolidated Statements of Operations
|
(Unaudited; in
millions, except per share amounts)
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
Revenues:
|
|
|
|
Net sales
|
$
|
4,400.1
|
|
|
$
|
2,588.2
|
|
Other
revenues
|
30.2
|
|
|
31.0
|
|
Total
revenues
|
4,430.3
|
|
|
2,619.2
|
|
Cost of
sales
|
3,303.0
|
|
|
1,713.1
|
|
Gross
profit
|
1,127.3
|
|
|
906.1
|
|
Operating
expenses:
|
|
|
|
Research and
development
|
184.1
|
|
|
114.2
|
|
Selling, general and
administrative
|
1,186.5
|
|
|
605.4
|
|
Litigation settlements
and other contingencies, net
|
22.9
|
|
|
1.8
|
|
Total operating
expenses
|
1,393.5
|
|
|
721.4
|
|
(Loss) earnings from
operations
|
(266.2)
|
|
|
184.7
|
|
Interest
expense
|
169.0
|
|
|
119.9
|
|
Other expense,
net
|
6.1
|
|
|
34.1
|
|
(Loss) earnings
before income taxes
|
(441.3)
|
|
|
30.7
|
|
Income tax
provision
|
596.3
|
|
|
9.9
|
|
Net (loss)
earnings
|
$
|
(1,037.6)
|
|
|
$
|
20.8
|
|
(Loss) earnings per
share attributable to Viatris Inc. shareholders
|
|
|
|
Basic
|
$
|
(0.86)
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.86)
|
|
|
$
|
0.04
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
1,207.5
|
|
|
516.4
|
|
Diluted
|
1,207.5
|
|
|
517.0
|
|
Viatris Inc. and
Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited; in
millions)
|
|
|
March 31,
2021
|
|
December
31,
2020
|
ASSETS
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
806.9
|
|
|
$
|
844.4
|
|
Accounts receivable,
net
|
4,529.0
|
|
|
4,843.8
|
|
Inventories
|
4,942.2
|
|
|
5,471.9
|
|
Prepaid expenses and
other current assets
|
2,040.4
|
|
|
1,707.4
|
|
Total current
assets
|
12,318.5
|
|
|
12,867.5
|
|
Intangible assets,
net
|
28,489.6
|
|
|
29,683.2
|
|
Goodwill
|
11,907.3
|
|
|
12,347.0
|
|
Other non-current
assets
|
6,263.8
|
|
|
6,655.3
|
|
Total
assets
|
$
|
58,979.2
|
|
|
$
|
61,553.0
|
|
LIABILITIES AND
EQUITY
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
|
2,300.2
|
|
|
$
|
2,308.5
|
|
Other current
liabilities
|
7,677.9
|
|
|
8,254.4
|
|
Long-term
debt
|
22,102.2
|
|
|
22,429.2
|
|
Other non-current
liabilities
|
5,484.2
|
|
|
5,606.8
|
|
Total
liabilities
|
37,564.5
|
|
|
38,598.9
|
|
Shareholders'
equity
|
21,414.7
|
|
|
22,954.1
|
|
Total liabilities and
equity
|
$
|
58,979.2
|
|
|
$
|
61,553.0
|
|
Viatris
Inc.
|
Key Product Net
Sales, on a Consolidated Basis
|
Three Months Ended
March 31, 2021
|
(Unaudited)
|
|
|
(In
millions)
|
Total
|
Select Key Global
Products
|
|
Lipitor ®
|
$
|
464.6
|
|
Norvasc ®
|
227.7
|
|
Lyrica ®
|
187.8
|
|
Viagra ®
|
139.6
|
|
EpiPen®
Auto-Injectors
|
103.7
|
|
Celebrex ®
|
89.0
|
|
Effexor ®
|
76.6
|
|
Zoloft ®
|
76.6
|
|
Creon ®
|
69.9
|
|
Xalabrands
|
57.9
|
|
|
|
Select Key Segment
Products
|
|
Amitiza ®
|
$
|
45.9
|
|
Xanax ®
|
45.1
|
|
Dymista ®
|
40.3
|
|
Yupelri ®
|
36.9
|
|
|
____________
|
(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 introductions.
|
Viatris Inc. and
Subsidiaries
|
Reconciliation of
Non-GAAP Financial Measures
|
(Unaudited; in
millions)
|
Reconciliation
of U.S. GAAP Net (Loss) Earnings to Adjusted Net
Earnings
|
|
Below is a
reconciliation of U.S. GAAP net (loss) earnings to adjusted net
earnings for the three months
ended March 31, 2021 compared to the prior year
period:
|
|
|
Three Months
Ended
March 31,
|
(In
millions)
|
2021
|
|
2020
|
U.S. GAAP net (loss)
earnings
|
$
|
(1,037.6)
|
|
|
$
|
20.8
|
|
Purchase accounting
related amortization (primarily included in cost of sales)
(a)
|
1,255.0
|
|
|
352.2
|
|
Litigation
settlements and other contingencies, net
|
22.9
|
|
|
1.8
|
|
Interest expense
(primarily amortization of premiums and discounts on long term
debt)
|
(13.3)
|
|
|
5.8
|
|
Clean energy
investments pre-tax loss
|
17.9
|
|
|
17.3
|
|
Acquisition related
costs (primarily included in SG&A) (b)
|
59.8
|
|
|
23.2
|
|
Restructuring related
costs (c)
|
315.4
|
|
|
7.6
|
|
Share-based
compensation expense
|
32.7
|
|
|
19.4
|
|
Other special items
included in:
|
|
|
|
Cost of sales
(d)
|
86.7
|
|
|
117.3
|
|
Research and
development expense (e)
|
14.7
|
|
|
1.7
|
|
Selling, general and
administrative expense
|
19.3
|
|
|
(3.4)
|
|
Other expense,
net
|
—
|
|
|
(0.4)
|
|
Tax effect of the
above items and other income tax related items
(f)
|
342.9
|
|
|
(96.1)
|
|
Adjusted net
earnings
|
$
|
1,116.4
|
|
|
$
|
467.2
|
|
|
____________
|
Significant items
include the following:
|
(a)
|
For the three months
ended March 31, 2021 includes amortization of the purchase
accounting inventory fair value adjustment related to the
Combination totaling approximately $476.4 million.
|
(b)
|
Acquisition related
costs consist primarily of transaction costs including legal and
consulting fees and integration activities.
|
(c)
|
For the three months
ended March 31, 2021 charges of approximately $167.8 million are
included in cost of sales, approximately $6.4 million are included
in R&D, and approximately $141.2 million are included in
SG&A.
|
(d)
|
Costs incurred during
the three months ended March 31, 2021 includes incremental
manufacturing variances and site remediation activities as a result
of the activities at the Company's Morgantown plant of
approximately $45.0 million. Costs incurred during the three months
ended March 31, 2020 primarily relate to incremental manufacturing
variances and site remediation activities as a result of the
activities at the company's Morgantown plant of approximately $58.8
million. In addition, the prior year period includes approximately
$25.0 million related to a special bonus for plant employees as a
result of the COVID-19 pandemic.
|
(e)
|
Adjustments primarily
relate to non-refundable payments related to development
collaboration agreements.
|
(f)
|
Adjusted for changes
for uncertain tax positions and for certain impacts of the
Combination.
|
Reconciliation
of U.S. GAAP Net (Loss) Earnings to EBITDA and Adjusted
EBITDA
|
|
Below is a
reconciliation of U.S. GAAP net (loss) earnings to EBITDA and
adjusted EBITDA for the three
months ended March 31, 2021 compared to the prior year
period:
|
|
|
Three Months
Ended
|
|
March
31,
|
(In
millions)
|
2021
|
|
2020
|
U.S. GAAP net (loss)
earnings
|
$
|
(1,037.6)
|
|
|
$
|
20.8
|
|
Add
adjustments:
|
|
|
|
Net contribution
attributable to equity method investments
|
17.9
|
|
|
17.3
|
|
Income tax
provision
|
596.3
|
|
|
9.9
|
|
Interest expense
(a)
|
169.0
|
|
|
119.9
|
|
Depreciation and
amortization (b)
|
1,422.5
|
|
|
415.0
|
|
EBITDA
|
$
|
1,168.1
|
|
|
$
|
582.9
|
|
Add
adjustments:
|
|
|
|
Share-based
compensation expense
|
32.7
|
|
|
19.4
|
|
Litigation settlements
and other contingencies, net
|
22.9
|
|
|
1.8
|
|
Restructuring,
acquisition related and other special items
(c)
|
412.9
|
|
|
146.6
|
|
Adjusted
EBITDA
|
$
|
1,636.6
|
|
|
$
|
750.7
|
|
|
____________
|
(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 (Loss) Earnings to Adjusted Net
Earnings.
|
Summary of Total
Revenues by Segment
|
|
|
Three Months
Ended
|
|
March
31,
|
(in
millions)
|
2021
|
|
2020
|
|
%
Change
|
|
2021
Currency
Impact (1)
|
|
2021
Constant
Currency
Revenues
|
|
Constant
Currency %
Change (2)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
$
|
2,571.6
|
|
|
$
|
1,986.4
|
|
|
29
|
%
|
|
$
|
(96.9)
|
|
|
$
|
2,474.7
|
|
|
25
|
%
|
Greater
China
|
591.9
|
|
|
15.1
|
|
|
nm
|
|
0.2
|
|
|
592.1
|
|
|
nm
|
JANZ
|
481.9
|
|
|
243.2
|
|
|
98
|
%
|
|
(21.9)
|
|
|
460.0
|
|
|
89
|
%
|
Emerging
Markets
|
754.7
|
|
|
343.5
|
|
|
120
|
%
|
|
(0.3)
|
|
|
754.4
|
|
|
120
|
%
|
Total net
sales
|
4,400.1
|
|
|
2,588.2
|
|
|
70
|
%
|
|
(118.9)
|
|
|
4,281.2
|
|
|
65
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(3)
|
30.2
|
|
|
31.0
|
|
|
(3)
|
%
|
|
(0.5)
|
|
|
29.7
|
|
|
(4)
|
%
|
Consolidated total
revenues (4)
|
$
|
4,430.3
|
|
|
$
|
2,619.2
|
|
|
69
|
%
|
|
$
|
(119.4)
|
|
|
$
|
4,310.9
|
|
|
65
|
%
|
|
____________
|
(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 2021
constant currency net sales or revenues to the corresponding amount
in the prior year.
|
(3)
|
For the three months
ended March 31, 2021, other revenues in Developed Markets, Greater
China, JANZ, and Emerging Markets were approximately $22.3 million,
$1.4 million, $0.4 million, and $6.1 million,
respectively.
|
(4)
|
Amounts exclude
intersegment revenue that eliminates on a consolidated
basis.
|
Reconciliation of
Income Statement Line Items
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP cost of
sales
|
$
|
3,303.0
|
|
|
$
|
1,713.1
|
|
Deduct:
|
|
|
|
Purchase accounting
related amortization
|
(1,255.0)
|
|
|
(352.2)
|
|
Acquisition related
items
|
(2.5)
|
|
|
(0.8)
|
|
Restructuring related
costs
|
(167.8)
|
|
|
(3.7)
|
|
Share-based
compensation expense
|
(0.6)
|
|
|
(0.3)
|
|
Other special
items
|
(86.7)
|
|
|
(117.3)
|
|
Adjusted cost of
sales
|
$
|
1,790.4
|
|
|
$
|
1,238.8
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
|
2,639.9
|
|
|
$
|
1,380.4
|
|
|
|
|
|
Adjusted gross margin
(a)
|
60
|
%
|
|
53
|
%
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP
R&D
|
$
|
184.1
|
|
|
$
|
114.2
|
|
Deduct:
|
|
|
|
Acquisition related
costs
|
(0.1)
|
|
|
—
|
|
Restructuring and
related costs
|
(6.4)
|
|
|
(0.2)
|
|
Share-based
compensation expense
|
(1.1)
|
|
|
(0.4)
|
|
Other special
items
|
(14.7)
|
|
|
(1.7)
|
|
Adjusted
R&D
|
$
|
161.8
|
|
|
$
|
111.9
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
4
|
%
|
|
4
|
%
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP
SG&A
|
$
|
1,186.5
|
|
|
$
|
605.4
|
|
Add /
(Deduct):
|
|
|
|
Acquisition related
costs
|
(57.2)
|
|
|
(22.2)
|
|
Restructuring and
related costs
|
(141.2)
|
|
|
(3.7)
|
|
Share-based
compensation expense
|
(31.0)
|
|
|
(18.6)
|
|
Other special items
and reclassifications
|
(19.3)
|
|
|
3.4
|
|
Adjusted
SG&A
|
$
|
937.8
|
|
|
$
|
564.3
|
|
|
|
|
|
Adjusted SG&A as
% of total revenues
|
21
|
%
|
|
22
|
%
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP total
operating expenses
|
$
|
1,393.5
|
|
|
$
|
721.4
|
|
(Deduct):
|
|
|
|
Litigation settlements
and other contingencies, net
|
(22.9)
|
|
|
(1.8)
|
|
R&D
adjustments
|
(22.3)
|
|
|
(2.3)
|
|
SG&A
adjustments
|
(248.7)
|
|
|
(41.1)
|
|
Adjusted total
operating expenses
|
$
|
1,099.6
|
|
|
$
|
676.2
|
|
|
|
|
|
Adjusted earnings
from operations (b)
|
$
|
1,540.3
|
|
|
$
|
704.2
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP interest
expense
|
$
|
169.0
|
|
|
$
|
119.9
|
|
Add/(Deduct):
|
|
|
|
Amortization of
premiums and discounts on long-term debt
|
16.0
|
|
|
(1.4)
|
|
Other special
items
|
(2.7)
|
|
|
(4.4)
|
|
Adjusted interest
expense
|
$
|
182.3
|
|
|
$
|
114.1
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP other
expense, net
|
$
|
6.1
|
|
|
$
|
34.1
|
|
Add /
(Deduct):
|
|
|
|
Clean energy
investments pre-tax loss (c)
|
(17.9)
|
|
|
(17.3)
|
|
Other items
|
—
|
|
|
0.4
|
|
Adjusted other
expense (income)
|
$
|
(11.8)
|
|
|
$
|
17.2
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2021
|
|
2020
|
U.S. GAAP (loss)
earnings before income taxes
|
$
|
(441.3)
|
|
|
$
|
30.7
|
|
Total pre-tax
non-GAAP adjustments
|
1,811.1
|
|
|
542.5
|
|
Adjusted earnings
before income taxes
|
$
|
1,369.8
|
|
|
$
|
573.2
|
|
|
|
|
|
U.S. GAAP income
tax provision
|
$
|
596.3
|
|
|
$
|
9.9
|
|
Adjusted tax
(benefit) expense
|
(342.9)
|
|
|
96.1
|
|
Adjusted income tax
provision
|
$
|
253.4
|
|
|
$
|
106.0
|
|
|
|
|
|
Adjusted effective
tax rate
|
18.5
|
%
|
|
18.5
|
%
|
|
___________
|
(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 Mylan's 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.
|
Reconciliation of
Estimated 2021 GAAP Net Cash Provided by Operating Activities to
Free Cash Flow
|
|
(Unaudited; in
millions)
|
|
A reconciliation of
the estimated 2021 GAAP Net Cash provided by Operating Activities
to Free Cash Flow is presented below:
|
|
Estimated GAAP Net
Cash provided by Operating Activities
|
$2,650 -
$2,800
|
|
|
Less: Capital
Expenditures
|
$(500) -
$(650)
|
|
|
Free Cash
Flow
|
$2,000 -
$2,300
|
Combined Adjusted
EBITDA - Three months ended March 31, 2020
|
|
(In
millions)
|
Three Months
Ended
March 31, 2020
|
Upjohn - U.S. GAAP
Income before taxes
|
$
|
885.3
|
|
Interest
expense
|
53.7
|
|
Depreciation and
amortization
|
76.8
|
|
Upjohn
EBITDA
|
$
|
1,015.7
|
|
|
|
Other
adjustments
|
60.9
|
|
Upjohn Adjusted
EBITDA
|
$
|
1,076.6
|
|
Add: Mylan Adjusted
EBITDA
|
750.7
|
|
Combined Adjusted
EBITDA
|
$
|
1,827.3
|
|
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SOURCE Viatris Inc.