PITTSBURGH, Feb. 22, 2021 /PRNewswire/ -- Viatris Inc.
(NASDAQ: VTRS) today announced its 2021 financial guidance and
reaffirmed its commitment to rapid de-leveraging, to
enhancing and growing free cash flows, particularly following the
phasing out of one-time and other stand up costs, to initiating a
dividend, and to delivering total shareholder return (TSR).
2021 Financial
Guidance
|
|
Range
(Billions)
|
Midpoint
(Billions)
|
Revenue
|
$17.2 -
$17.8
|
$17.5
|
Adjusted EBIDTA
(1)
|
$6.0 -
$6.4
|
$6.2
|
Free Cash Flow
(1)
|
$2.0 -
$2.3
|
$2.15
|
(1) Non-GAAP
financial measures. Please see "Non-GAAP Financial Measures"
for
additional information.
The 2021 Free Cash
Flow guidance includes $1.5 billion cash cost to achieve
synergies and other one-time cash costs.
|
Viatris CEO Michael Goettler said, "The strategic
rationale for creating Viatris is as compelling today as when we
announced the transaction to create this new company in
July 2019. We launched Viatris with a
TSR-focused operating model and a commitment to maintaining a
strong balance sheet. As we previously stated, our company's
priorities in the first three years as we stand up Viatris will be
predominately focused on rebalancing the business, generating
strong and growing free cash flows, and rapidly de-leveraging.
"We are confident that our financial guidance for 2021 is the
right starting point for Viatris and continue to expect 2021 to be
our trough year in terms of revenue, adjusted EBITDA and free cash
flow, reflecting a balanced view of both near-term tailwinds and
headwinds, particularly given the delay in closing of the
combination between Mylan and Pfizer's Upjohn business," Goettler
said.
Goettler continued, "Our Global Healthcare Gateway®
will fuel our future growth by leveraging our own diverse portfolio
and pipeline, as well as those of our current and future partners
through our unmatched global infrastructure, and significant
scientific, manufacturing and commercial capabilities, all while
executing on our mission to empower people worldwide to live
healthier at every stage of life. We also look forward to meeting
our commitment to provide a longer-term financial outlook in the
coming months."
Viatris president Rajiv
Malik said, "Since we launched Viatris approximately 90 days
ago, we have taken swift and decisive action to rebalance and
position our business to succeed and compete in the current
environment. This includes our multi-year global restructuring
program we expect will accelerate the achievement of our
$1 billion in cost synergies in three
years, instead of our initial four-year timeframe, and will
position us to continue to optimize our unique platform over the
long term. We have made significant progress on this program,
including taking steps to optimize our commercial and functional
infrastructure, consolidate manufacturing sites and implement
centers of excellence to enhance innovation and efficiency. We
expect this work will enable us to create a more flexible,
efficient Viatris better positioned to achieve our long-term
objectives. We are looking forward to maximizing our anticipated
new product launches, including biosimilars and complex generics,
through our enhanced combined global manufacturing and commercial
platforms."
Initiating 2021 Dividend and Reaffirming Capital Allocation
Priorities
The Viatris Board has undertaken a comprehensive review of
management's operating plan for 2021 and unanimously supports the
Company's priorities for the next few years, including its
priorities for capital allocation and initiating an annualized
dividend of at least 25% of free cash flow for 2021. Based on the
mid-point of Viatris' 2021 free cash flow guidance of $2.15 billion, the Board expects the Company to
pay an annualized dividend of approximately $540 million, or $0.44 per share, with the expectation to grow the
dividend amount thereafter. Due to the timing of the initiation of
the dividend we expect to make three payments in 2021 totaling
approximately $400 million. The
Company expects the first quarterly dividend of $0.11 per share to be declared in May 2021 and distributed in June 2021, subject to the Board's first quarter
2021 review.
The Company expanded its commitment to debt paydown and to
maintaining its investment grade credit rating, and now expects to
repay approximately $6.5 billion in
debt by the end of 2023. In addition, the Company is targeting a
long-term leverage ratio of 2.5x, with a range of 2.2x to 2.8x. The
Company also continues to be committed not to institute any share
repurchase programs until the leverage ratio is at least
<2.5x.
Viatris chief financial officer Sanjeev
Narula said, "Our disciplined approach and financial
commitments of de-levering the balance sheet while delivering value
to shareholders are paramount to our priorities and operational
thesis. This will be supported by our expectation to enhance cash
flows and create more financial flexibility. We are confident that
2021 will be our trough year as we have no significant additional
near-term product Loss of Exclusivities."
Key Metrics
Utilized for 2021 Financial Guidance
|
Adjusted Gross
Margin (1)
|
58.0% -
59.0%
|
|
Adjusted SG&A
% of Total Revenue (1)
|
20.5% -
21.5%
|
|
Adjusted R&D %
of Total Revenue (1)
|
3.7% -
3.9%
|
|
Net Cash Provided
by Operating Activities
|
$2.65 - $2.80
billion
|
|
Capital
Expenditures
|
$0.5 - $0.65
billion
|
|
Adjusted Effective
Tax Rate (1)
|
18.0% -
19.0%
|
|
Shares
Outstanding
|
1.209 - 1.213
billion
|
|
|
(1) Non-GAAP
financial measures. Please see "Non-GAAP Financial Measures" for
additional
information.
|
|
Key Exchange Rates
Used for 2021 Guidance
|
Australian Dollar
($ / AUD)
|
1.37
|
British Pound ($ /
GBP)
|
0.76
|
Canadian Dollar ($
/ CAD)
|
1.31
|
China Renminbi ($
/ CNY)
|
6.69
|
Euro ($ /
EUR)
|
0.84
|
Indian Rupee ($ /
INR)
|
73.76
|
Japanese Yen ($ /
JPY)
|
104.77
|
South Korean Won
($ / KRW)
|
1,138.64
|
Conference Call
As previously announced, Viatris will host a conference call at
8 a.m. ET today, Feb. 22, 2021, to discuss 2021 financial
guidance.
The briefing can be accessed live by calling (855)
493-3607 or (346) 354-0950 for international callers
(ID#: 3235536) or at the following address on the company's
website: investor.viatris.com. The slide presentation and
replay of the webcast also will be available on the website.
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 of America ("U.S. GAAP").
These non-GAAP financial measures, including, but not limited to,
adjusted EBITDA, free cash flow, adjusted gross margin, adjusted
R&D and as a % of total revenues, adjusted SG&A and as a %
of total revenues, adjusted effective tax rate and long-term
leverage ratio target of ≤ 2.5x, are presented in order to
supplement investors' and other readers' understanding and
assessment of the financial performance of Viatris. 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 in
this press release, 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.
The stated forward-looking non-GAAP financial measure of Viatris
targeting a long-term leverage ratio of 2.5x, with a range of 2.2x
to 2.8x, is based on the ratio of (i) targeted long-term average
debt and (ii) targeted long-term Credit Agreement Adjusted EBITDA.
However, Viatris has not quantified future amounts to develop this
target but has stated its goal to manage long-term average debt and
adjusted EBITDA over time in order to generally maintain or reach
the target. This target does not reflect company guidance. For the
quarter ended September 30, 2020,
Mylan's Credit Agreement Adjusted EBITDA was based on the sum of
(i) Mylan's adjusted EBITDA for the quarters ended December 31, 2019, March
31, 2020, June 30, 2020 and
September 30, 2020 and (ii) certain
adjustments permitted to be included in Credit Agreement Adjusted
EBITDA as of September 30, 2020
pursuant to the revolving credit facility dated as of July 27, 2018 (as amended, supplemented or
otherwise modified from time to time), among Mylan Inc., as
borrower, the Company, as guarantor, certain affiliates and
subsidiaries of the Company from time to time party thereto as
guarantors, each lender from time to time party thereto and Bank of
America, N.A., as administrative agent (the "Credit Agreement").
Viatris is party to a credit agreement, dated June 16, 2020, by and among Viatris, certain
lenders and issuing banks from time-to-time party thereto and Bank
of America, N.A., as administrative agent, that going forward will
permit similar adjustments as the Credit Agreement to be included
in Credit Agreement Adjusted EBITDA for Viatris. For the quarter
ended September 30, 2020, Mylan N.V.
("Mylan") calculated adjusted EBITDA as U.S. GAAP net earnings
(loss) adjusted for clean energy investments pre-tax loss, income
tax (benefit) provision, interest expense and depreciation and
amortization (to get to EBITDA) and further adjusted for
share-based compensation expense, litigation settlements and other
contingencies, net and restructuring, acquisition related and other
special items to get to adjusted EBITDA. Mylan was the accounting
acquiror in the transaction pursuant to which Mylan combined with
Pfizer Inc.'s Upjohn business (the "Upjohn Business") in a Reverse
Morris Trust transaction (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. However, future non-GAAP financial measures
used by Viatris may not be directly comparable to the historical
Mylan non-GAAP financial measures set forth above.
Full Year 2021
Guidance Items
(Unaudited; in
millions)
|
|
GAAP
|
Non-GAAP
|
Revenue
|
$17,200 -
$17,800
|
N/A
|
Net
Loss
|
$(100) -
$(300)
|
N/A
|
Adjusted
EBIDTA
|
N/A
|
$6,000 -
$6,400
|
Net Cash provided
by
Operating Activities
|
$2,650 -
$2,800
|
N/A
|
Free Cash
Flow
|
N/A
|
$2,000 -
$2,300
|
Reconciliation of
Estimated 2021 GAAP Net Loss to Non-GAAP Adjusted
EBITDA
(Unaudited; in
millions)
|
A reconciliation of
the estimated 2021 GAAP Net Loss to Non-GAAP Adjusted EBITDA
and the items excluded from Adjusted EBITDA is presented
below.
|
Estimated GAAP Net
Loss
|
$(100) –
$(300)
|
Adjusted
EBIDTA
|
$6,000 -
$6,400
|
|
-----------------------------
|
Difference at
Mid-Point
|
$6,400
|
Estimated
Reconciling Items:
|
Depreciation and
Amortization
|
$3,100
|
Amortization of
the Inventory Fair Value Adjustment
from the Combination
|
$1,200
|
Restructuring and
Acquisition Related Costs
|
$1,000
|
Interest
Expense
|
$700
|
Other Items
included tax expense, net
|
$400
|
|
-----------------------------
|
Total
|
$6,400
|
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
|
Key Metrics
Utilized for 2021 Guidance
(Unaudited; in
millions, except percentages)
|
|
GAAP
|
Non-GAAP
|
Gross margin as a
% of revenue
|
31.0 –
33.0%
|
58.0 –
59.0%
|
SG&A expenses
as a % of revenue
|
24.0 –
26.0%
|
20.5 –
21.5%
|
R&D expenses
as a % of revenue
|
3.8 – 4.0%
|
3.7 – 3.9%
|
Net Cash provided
by Operating
Activities
|
$2,650 -
$2,800
|
N/A
|
Capital
Expenditures
|
$500 -
$650
|
N/A
|
Effective Tax
Rate
|
12.0 –
16.0%
|
18.0 –
19.0%
|
Shares
Outstanding
|
1,209 –
1,213
|
N/A
|
2021 Non-GAAP Financial Metrics
The Non-GAAP financial metric Adjusted Gross Margin as a
percentage of Revenues excludes the impact of Depreciation and
Amortization, the Amortization of the Inventory Fair Value
Adjustment from the Combination and certain Restructuring and
Acquisition Related Costs when compared to the GAAP Gross Margin as
a percentage of Revenues.
The Non-GAAP financial metric Adjusted R&D as a percentage
of Revenues excludes the impact of certain Restructuring and
Acquisition Related Costs and other items when compared to the GAAP
R&D as a percentage of Revenues.
The Non-GAAP financial metric Adjusted SG&A as a percentage
of Revenues excludes the impact of certain Restructuring and
Acquisition Related Costs and other items when compared to the GAAP
SG&A as a percentage of Revenues.
The Non-GAAP financial metric Adjusted Effective Tax Rate
percentage the impact of non-GAAP adjustments and other tax related
items when compared to the GAAP Effective Tax Rate percentage.
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 through the combination of Mylan
and Pfizer's Upjohn business, 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 approximately 45,000, 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,
statements with respect to 2021 financial guidance, rapid
de-leveraging, debt repayments, long-term leverage ratio target and
ranges, enhancement and growth of free cash flows,
initiating a dividend and the expected dividend amounts, delivering
total shareholder return (TSR), maintaining a strong balance sheet,
rebalancing the business, 2021 being a trough year in terms
of revenue, adjusted EBITDA and free cash flow, tailwinds and
headwinds, our Global Healthcare Gateway® fueling our future
growth, executing on our mission to empower people worldwide to
live healthier at every stage of life, meeting our commitment to
provide a longer-term financial outlook in the coming months,
positioning our business to succeed and compete in the current
environment, maintaining investment grade credit rating, not
instituting any share repurchase programs until the leverage ratio
is at less than 2.5x, financial flexibility, delivering value to
shareholders being paramount to our priorities and operational
thesis, 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,
anticipated business levels, planned activities, anticipated
growth, market opportunities, strategies, competitions, 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 or 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 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
the final information statement, dated August 6, 2020, which is attached as Exhibit 99.1
to Upjohn's Current Report on Form 8-K filed on August 6, 2020. You can access this and 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. 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.
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