- Reports Total Revenues of $3.94
Billion; U.S. GAAP Net Earnings of $332 Million; Adjusted EBITDA of $1.36 Billion; U.S. GAAP Net Cash Provided by
Operating Activities of $834 Million;
and Free Cash Flow of $738 Million
for the Quarter
- Strong Results Signal Continuation of Growth Journey with
Second Consecutive Quarter of Year-over-Year Operational Revenue
Growth on a Divestiture-Adjusted
Basis[2]
- Revises Full-Year Total Revenues Guidance Range Solely to
Reflect the Expected Negative Impact of Foreign Exchange
- On Track to Complete All Planned Divestitures by the End of
the First Half of 2024[3]
- Board of Directors Declares Quarterly Dividend of
$0.12 Per Share
PITTSBURGH, Nov. 7, 2023
/PRNewswire/ -- Viatris Inc. (NASDAQ: VTRS) today reported strong
results for the third quarter of 2023 reflecting another quarter of
year-over-year growth[2] and signaling the continuation
of the Company's growth journey.
Executive Commentary
Viatris CEO Scott A.
Smith said: "Viatris had another outstanding quarter in
Q3. It is our second consecutive quarter of year-over-year
operational revenue growth on a divestiture-adjusted basis and our
eleventh straight quarter of strong operational results. These
results are an indication of the continuing momentum we are
building as we prepare to bring Phase 1 of our strategic plan to
successful completion. Operationally, we are continuing to see
strong performance globally across our businesses. We are on track
to complete all our planned divestitures by the end of the first
half of 2024. We are now shifting our focus to Phase 2 and to
adding to the strength of our stable base by building the business
in areas with the greatest potential for growth, patient impact and
shareholder value."
Viatris President Rajiv
Malik said: "We achieved yet another strong quarter of
commercial execution around the globe. As a result of our continued
advancement of our robust and deep pipeline, we are on track to
deliver $450 million to $550 million in new product revenue annually from
new launches, which supports the predictability of our core
business. We believe the stable global platform we have built and
our consistent performance sets Viatris up well for continued
future growth."
Viatris CFO Sanjeev
Narula said: "The diversity of our global portfolio and
platforms continue to drive strong gross margins. Our solid and
continued durable free cash flow generation has served to further
strengthen our balance sheet while returning significant capital to
shareholders. Based on the underlying fundamentals of our business,
we believe we are well positioned to deliver on our financial
guidance for the remainder of 2023 and for a strong start to
2024."
[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.
|
[2] For the three months
ended September 30, 2023, total net sales declined 3% on a U.S.
GAAP basis and increased 1% on a divestiture-adjusted operational
basis.
|
[3] Divestitures are
subject to regulatory approvals, completion of any consultations
with employee representatives (where applicable), receipt of
required consents and other closing conditions, including, in the
case of the API business divestiture, a financing
condition.
|
2023 Financial Guidance
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.
Return of Capital to Shareholders
Viatris announced that, on November 6, 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
December 15, 2023, to shareholders of record at the close of
business on November 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 September 15,
2023.
Conference Call and Earnings Materials
Viatris Inc. will host a conference call and live webcast, today
at 5:00 p.m. ET, to discuss the
Company's financial results for the third 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: VTRSQ323). The "Viatris Q3 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.
Financial
Summary
|
|
|
Three Months
Ended
|
|
September
30,
|
(Unaudited; in
millions, except %s)
|
2023
|
|
2022
|
|
Reported
Change
|
|
Operational
Change(1) (3)
|
|
Divestiture-
Adjusted
Operational
Change(2) (3)
|
Total Net
Sales
|
$ 3,933.9
|
|
$ 4,067.4
|
|
(3) %
|
|
(3) %
|
|
1 %
|
Developed
Markets
|
2,408.5
|
|
2,431.5
|
|
(1) %
|
|
(4) %
|
|
2 %
|
Emerging
Markets
|
642.5
|
|
678.9
|
|
(5) %
|
|
— %
|
|
2 %
|
JANZ
|
334.5
|
|
383.0
|
|
(13) %
|
|
(8) %
|
|
(6) %
|
Greater
China
|
548.4
|
|
574.0
|
|
(4) %
|
|
— %
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$ 2,533.1
|
|
$ 2,540.3
|
|
— %
|
|
(1) %
|
|
(1) %
|
Complex Gx
|
174.4
|
|
320.2
|
|
(46) %
|
|
(46) %
|
|
25 %
|
Generics
|
1,226.4
|
|
1,206.9
|
|
2 %
|
|
3 %
|
|
3 %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$ 1,691.3
|
|
$ 1,748.4
|
|
(3) %
|
|
|
|
|
U.S. GAAP Gross
Margin
|
42.9 %
|
|
42.9 %
|
|
|
|
|
|
|
Adjusted Gross Profit
(3)
|
$ 2,333.9
|
|
$ 2,469.3
|
|
(5) %
|
|
|
|
|
Adjusted Gross Margin
(3)
|
59.2 %
|
|
60.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net
Earnings
|
$
331.6
|
|
$
354.3
|
|
(6) %
|
|
|
|
|
Adjusted Net Earnings
(3)
|
$
952.8
|
|
$ 1,063.5
|
|
(10) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(3)
|
$ 1,223.1
|
|
$ 1,280.2
|
|
(4) %
|
|
|
|
|
Adjusted EBITDA
(3)
|
$ 1,360.1
|
|
$ 1,497.8
|
|
(9) %
|
|
(9) %
|
|
(6) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$
834.1
|
|
$
869.0
|
|
(4) %
|
|
|
|
|
Capital
expenditures
|
95.9
|
|
103.9
|
|
(8) %
|
|
|
|
|
Free cash flow (3)
(4)
|
$
738.2
|
|
$
765.1
|
|
(4) %
|
|
|
|
|
___________
|
(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. 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.
|
(4)
|
Excluding the impact of
transaction costs primarily related to the divestitures and the eye
care acquisitions of $48 million, free cash flow for the three
months ended September 30, 2023 was $786 million.
|
|
Nine Months
Ended
|
|
September
30,
|
(Unaudited; in
millions, except %s)
|
2023
|
|
2022
|
|
Reported
Change
|
|
Operational
Change(1) (3)
|
|
Divestiture-
Adjusted
Operational
Change(2) (3)
|
Total Net
Sales
|
$
11,562.5
|
|
$
12,351.0
|
|
(6) %
|
|
(4) %
|
|
— %
|
Developed
Markets
|
6,932.7
|
|
7,386.7
|
|
(6) %
|
|
(6) %
|
|
— %
|
Emerging
Markets
|
1,932.5
|
|
2,035.0
|
|
(5) %
|
|
2 %
|
|
4 %
|
JANZ
|
1,052.2
|
|
1,233.9
|
|
(15) %
|
|
(8) %
|
|
(8) %
|
Greater
China
|
1,645.1
|
|
1,695.4
|
|
(3) %
|
|
2 %
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$ 7,398.1
|
|
$ 7,577.5
|
|
(2) %
|
|
— %
|
|
— %
|
Complex Gx
|
449.7
|
|
1,065.8
|
|
(58) %
|
|
(58) %
|
|
(19) %
|
Generics
|
3,714.7
|
|
3,707.7
|
|
— %
|
|
3 %
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$ 4,842.1
|
|
$ 5,222.9
|
|
(7) %
|
|
|
|
|
U.S. GAAP Gross
Margin
|
41.8 %
|
|
42.2 %
|
|
|
|
|
|
|
Adjusted Gross Profit
(3)
|
$ 6,916.5
|
|
$ 7,374.4
|
|
(6) %
|
|
|
|
|
Adjusted Gross Margin
(3)
|
59.7 %
|
|
59.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net
Earnings
|
$
820.3
|
|
$ 1,067.4
|
|
(23) %
|
|
|
|
|
Adjusted Net Earnings
(3)
|
$ 2,791.1
|
|
$ 3,254.1
|
|
(14) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(3)
|
$ 3,586.2
|
|
$ 3,947.4
|
|
(9) %
|
|
|
|
|
Adjusted EBITDA
(3)
|
$ 4,006.7
|
|
$ 4,566.2
|
|
(12) %
|
|
(10) %
|
|
(7) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$ 2,320.2
|
|
$ 2,810.0
|
|
(17) %
|
|
|
|
|
Capital
expenditures
|
211.5
|
|
252.3
|
|
(16) %
|
|
|
|
|
Free cash flow (3)
(4)
|
$ 2,108.7
|
|
$ 2,557.7
|
|
(18) %
|
|
|
|
|
___________
|
(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.
|
(4)
|
Excluding the impact of
transaction costs primarily related to the divestitures and the eye
care acquisitions of $79 million, free cash flow for the nine
months ended September 30, 2023 was $2.19 billion.
|
Financial Highlights
- Third quarter 2023 total net sales totaled $3.93 billion, up 1% on a divestiture-adjusted
operational basis (as defined in "Certain Key Terms and
Presentation Matters" below) compared to Q3 2022 results.
- Brands performed in line with expectations, reflecting solid
year-over-year performance in key brands including
Yupelri® and Dymista® and sales from
Tyrvaya®.
- Complex generics performed slightly below expectations due to
phasing of new product launches.
- Generics, which include diversified product forms such as oral
solids, injectables, transdermals and topicals, performed ahead of
expectations due to solid performance across broader portfolio in
Developed and Emerging Markets.
- The Company generated approximately $135
million in new product revenues (as defined in "Certain Key
Terms and Presentation Matters" below) in the third quarter
(approximately $345 million for the
year to date) primarily driven by lenalidomide and Breyna™ in the
U.S. We expect to deliver more than $450
million in new product revenues in 2023.
- The Company had U.S. GAAP net cash provided by operating
activities of $834 million in the
third quarter ($2.32 billion for the
year to date) and generated $738
million of free cash flow in the third quarter ($2.11 billion for the year to date), 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 third quarter included
approximately $48 million
($79 million for the year to date) of
transaction costs primarily related to the eye care acquisitions
and the divestitures.
- The Company paid down $23 million
in debt in the third quarter ($750
million for the year to date). The Company remains fully
committed to maintaining its investment grade credit rating.
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-to-date 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, free cash flow
excluding the impact of transaction costs; 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, operational change, 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 nine months ended September 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 September 30,
2023.
About Viatris
Viatris Inc. (NASDAQ: VTRS) is a global healthcare company
uniquely positioned to bridge the traditional divide between
generics and brands, combining the best of both to more
holistically address healthcare needs globally. With a mission to
empower people worldwide to live healthier at every stage of life,
we provide access at scale. In 2022 alone, we supplied high-quality
medicines to approximately 1 billion patients around the world.
With our exceptionally extensive and diverse portfolio of
medicines, a one-of-a-kind global supply chain designed to reach
more people when and where they need them, and the scientific
expertise to address some of the world's most enduring health
challenges, access takes on deep meaning at Viatris. We have the
ability to touch all of life's moments, from birth to end of life,
acute conditions to chronic diseases. We are 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; Viatris reaffirms full-year 2023 adjusted
EBITDA and free cash flow guidance ranges; strong results signal
continuation of growth journey with second consecutive quarter of
year-over-year operational revenue growth on a divestiture-adjusted
basis; revises full-year total revenues guidance range solely to
reflect the expected negative impact of foreign exchange; on track
to complete all planned divestitures by the end of the first half
of 2024, subject to regulatory approvals, completion of any
consultations with employee representatives (where applicable),
receipt of required consents and other closing conditions,
including, in the case of the API business divestiture, a financing
condition; these results are an indication of the continuing
momentum we are building as we prepare to bring Phase 1 of our
strategic plan to successful completion; operationally, we are
continuing to see strong performance globally across our
businesses; we are now shifting our focus to Phase 2 and to adding
to the strength of our stable base by building the business in
areas with the greatest potential for growth, patient impact and
shareholder value; as a result of our continued advancement of our
robust and deep pipeline, we are on track to deliver $450 million to $550
million in new product revenue annually from new launches,
which supports the predictability of our core business; we believe
the stable global platform we have built and our consistent
performance sets Viatris up well for continued future growth; the
diversity of our global portfolio and platforms continue to drive
strong gross margins; our solid and continued durable free cash
flow generation has served to further strengthen our balance sheet
while returning significant capital to shareholders; based on the
underlying fundamentals of our business, we believe we are well
positioned to deliver on our financial guidance for the remainder
of 2023 and for a strong start to 2024; 2023 financial guidance
update; strong year-to-date operational revenue performance and
full-year trending in line with expectation; adjusting the guidance
range for total revenues solely due to foreign exchange headwinds
of ~2% if October rates hold for remainder of the year; expects to
absorb foreign exchange headwinds and be at the midpoint of 2023
guidance ranges for adjusted EBITDA and free cash flow; raising
adjusted gross margin key metric range to 58.5%-59.0% based on
strong year-to-date performance; Viatris announced that, on
November 6, 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 payable on December 15, 2023, to
shareholders of record at the close of business on
November 24, 2023; we expect to deliver more than $450 million in new product revenues in 2023; 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 and
announced divestitures (including an offer for the divestiture of
substantially all of the Company's over-the-counter ("OTC")
business and definitive agreements to divest the Company's women's
healthcare business and, separately, in another transaction, the
Company's rights to two women's healthcare products, the Company's
active pharmaceutical ingredient business in India and commercialization rights in 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 (the "Upjohn
Distributor Markets")) 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
(including but not limited to announced divestitures); the
possibility that the Company may be unable to achieve intended or
expected benefits, goals, outlooks, synergies and operating
efficiencies in connection with acquisitions, divestitures, or its
global restructuring program within the expected timeframe or at
all; with respect to previously announced divestitures, such
divestitures not being completed on the expected timelines or at
all, the risk that the conditions set forth in the definitive
agreements with respect to such divestitures will not be satisfied
or waived, failure to realize the total transaction values for the
divestitures and/or the expected proceeds for any or all such
divestitures, including as a result of any purchase price
adjustment or a failure to achieve any conditions to the payment of
any contingent consideration, the risk that the Company may elect
not to exercise its option to accept the offer in the OTC
transaction, and that the Company expects to incur a significant
loss related to the OTC divestiture; goodwill or other impairment
charges or other losses related to the divestiture or sale of
businesses or assets (including but not limited to announced
divestitures); 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, Part II, Item 1A of the Company's Quarterly Report on Form
10-Q for the three months ended September
30, 2023, 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.
ViatrisInc. and
Subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In millions,
except per share amounts)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$ 3,933.9
|
|
$ 4,067.4
|
|
$
11,562.5
|
|
$
12,351.0
|
Other
revenues
|
8.0
|
|
10.8
|
|
27.1
|
|
35.7
|
Total
revenues
|
3,941.9
|
|
4,078.2
|
|
11,589.6
|
|
12,386.7
|
Cost of
sales
|
2,250.6
|
|
2,329.8
|
|
6,747.5
|
|
7,163.8
|
Gross profit
|
1,691.3
|
|
1,748.4
|
|
4,842.1
|
|
5,222.9
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
211.2
|
|
174.9
|
|
602.4
|
|
479.8
|
Acquired
IPR&D
|
1.0
|
|
—
|
|
11.2
|
|
—
|
Selling, general and
administrative
|
1,053.5
|
|
1,017.3
|
|
3,044.3
|
|
2,913.7
|
Litigation settlements
and other contingencies, net
|
(26.1)
|
|
(3.9)
|
|
(36.5)
|
|
13.2
|
Total operating
expenses
|
1,239.6
|
|
1,188.3
|
|
3,621.4
|
|
3,406.7
|
Earnings from
operations
|
451.7
|
|
560.1
|
|
1,220.7
|
|
1,816.2
|
Interest
expense
|
141.5
|
|
153.2
|
|
432.2
|
|
445.3
|
Other (income) expense,
net
|
(92.0)
|
|
(20.6)
|
|
(269.4)
|
|
26.6
|
Earnings before income
taxes
|
402.2
|
|
427.5
|
|
1,057.9
|
|
1,344.3
|
Income tax
provision
|
70.6
|
|
73.2
|
|
237.6
|
|
276.9
|
Net earnings
|
$
331.6
|
|
$
354.3
|
|
$
820.3
|
|
$ 1,067.4
|
Earnings per share
attributable to Viatris Inc. shareholders
|
|
|
|
|
|
|
|
Basic
|
$
0.28
|
|
$
0.29
|
|
$
0.68
|
|
$
0.88
|
Diluted
|
$
0.27
|
|
$
0.29
|
|
$
0.68
|
|
$
0.88
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,199.5
|
|
1,212.5
|
|
1,200.4
|
|
1,211.8
|
Diluted
|
1,207.6
|
|
1,218.1
|
|
1,205.6
|
|
1,216.1
|
ViatrisInc. and
Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
(In
millions)
|
September
30,
2023
|
|
December 31,
2022
|
ASSETS
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
1,309.6
|
|
$
1,259.9
|
Accounts receivable,
net
|
3,738.5
|
|
3,814.5
|
Inventories
|
3,671.9
|
|
3,519.5
|
Prepaid expenses and
other current assets
|
1,784.7
|
|
1,811.2
|
Assets held for
sale
|
427.3
|
|
230.3
|
Total current
assets
|
10,932.0
|
|
10,635.4
|
Intangible assets,
net
|
21,280.5
|
|
22,607.1
|
Goodwill
|
10,278.1
|
|
10,425.8
|
Other non-current
assets
|
6,252.0
|
|
6,353.9
|
Total assets
|
$
48,742.6
|
|
$
50,022.2
|
LIABILITIES AND
EQUITY
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
1,307.4
|
|
$
1,259.1
|
Liabilities held for
sale
|
14.3
|
|
—
|
Other current
liabilities
|
5,512.3
|
|
5,487.1
|
Long-term
debt
|
17,076.9
|
|
18,015.2
|
Other non-current
liabilities
|
3,966.1
|
|
4,188.5
|
Total
liabilities
|
27,877.0
|
|
28,949.9
|
Shareholders'
equity
|
20,865.6
|
|
21,072.3
|
Total liabilities and
equity
|
$
48,742.6
|
|
$
50,022.2
|
Viatris Inc. and
Subsidiaries
|
Key Product Net
Sales, on a Consolidated Basis
|
(Unaudited)
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
(In
millions)
|
2023
|
2022
|
|
2023
|
2022
|
Select Key Global
Products
|
|
|
|
|
|
Lipitor ®
|
$
381.6
|
$
420.4
|
|
$
1,179.5
|
$ 1,266.1
|
Norvasc ®
|
175.5
|
189.3
|
|
560.6
|
600.1
|
Lyrica ®
|
141.7
|
156.5
|
|
423.1
|
483.9
|
EpiPen®
Auto-Injectors
|
131.9
|
114.4
|
|
355.2
|
309.7
|
Viagra ®
|
110.5
|
117.0
|
|
336.5
|
361.9
|
Celebrex ®
|
84.7
|
82.2
|
|
255.5
|
253.4
|
Creon ®
|
77.5
|
76.4
|
|
224.3
|
226.5
|
Effexor ®
|
65.5
|
64.2
|
|
194.9
|
215.4
|
Zoloft ®
|
62.7
|
53.1
|
|
173.7
|
188.7
|
Xalabrands
|
47.9
|
51.0
|
|
145.0
|
146.7
|
|
|
|
|
|
|
Select Key Segment
Products
|
|
|
|
|
|
Influvac ®
|
$
137.2
|
$
159.3
|
|
$
137.5
|
$ 178.3
|
Yupelri ®
|
58.3
|
53.4
|
|
160.3
|
146.1
|
Dymista ®
|
44.1
|
38.6
|
|
155.0
|
138.0
|
Amitiza ®
|
37.7
|
39.4
|
|
115.8
|
125.3
|
Xanax ®
|
28.2
|
38.3
|
|
119.7
|
115.5
|
____________
|
(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 nine months ended September 30, 2023 include the impact of
foreign currency translations compared to the prior year
period.
|
ViatrisInc. 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 nine months ended
September 30, 2023 compared to the prior year
periods:
|
|
|
Three Months
Ended
September 30,
|
Nine Months
Ended
September 30,
|
(In
millions)
|
2023
|
|
2022
|
2023
|
|
2022
|
U.S. GAAP net
earnings
|
$
331.6
|
|
$
354.3
|
|
$
820.3
|
|
$
1,067.4
|
Purchase accounting
related amortization (primarily included in cost of sales)
(a)
|
602.0
|
|
626.7
|
|
1,864.6
|
|
1,930.5
|
Litigation settlements
and other contingencies, net
|
(26.1)
|
|
(3.9)
|
|
(36.5)
|
|
13.2
|
Interest expense
(primarily amortization of premiums and discounts on long term
debt)
|
(10.7)
|
|
(10.0)
|
|
(31.5)
|
|
(36.8)
|
Acquisition and
divestiture-related costs (primarily included in SG&A)
(b)
|
115.7
|
|
99.2
|
|
230.1
|
|
306.3
|
Restructuring related
costs (c)
|
14.9
|
|
15.0
|
|
98.7
|
|
42.0
|
Share-based
compensation expense
|
43.1
|
|
29.1
|
|
124.9
|
|
86.8
|
Other special items
included in:
|
|
|
|
|
|
|
|
Cost of sales
(d)
|
16.7
|
|
68.9
|
|
91.9
|
|
150.4
|
Research and
development expense
|
0.3
|
|
—
|
|
2.7
|
|
0.9
|
Selling, general and
administrative expense
|
2.7
|
|
19.9
|
|
34.0
|
|
44.3
|
Other income, net
(e)
|
(26.4)
|
|
(6.3)
|
|
(114.0)
|
|
(8.2)
|
Tax effect of the above
items and other income tax related items (f)
|
(111.0)
|
|
(129.4)
|
|
(294.1)
|
|
(342.7)
|
Adjusted net
earnings
|
$
952.8
|
|
$ 1,063.5
|
|
$
2,791.1
|
|
$
3,254.1
|
____________
|
Significant items
include the following:
|
(a)
|
For the nine months
ended September 30, 2023, charges include an intangible asset
charge of approximately $32.0 million related to the planned
divestiture of 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 $22.0 million, for the three and nine months
ended September 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 nine
months ended September 30, 2023, charges include approximately
$9.1 million and $88.9 million, respectively, in cost of sales and
approximately $5.8 million and $9.8 million, respectively, in
SG&A.
|
(d)
|
For the three and nine
months ended September 30, 2023, charges include incremental
manufacturing variances at plants in the 2020 restructuring program
of approximately $1.0 million and $36.6 million, respectively.
For the nine months ended September 30, 2023, also includes
charges related to the planned divestiture of the Upjohn
Distributor Markets of approximately $19.2 million.
|
(e)
|
For the three months
ended September 30, 2023, includes a gain of approximately
$19.1 million as a result of remeasuring the compulsory
convertible preferred shares ("CCPS") in Biocon Biologics Limited
("Biocon Biologics") to fair value. For the nine months ended
September 30, 2023, includes gains of approximately
$115.1 million as a result of remeasuring our non-marketable
equity investments to fair value, including our equity interests in
Mapi Pharma Limited ("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 nine months
ended September 30, 2023, compared to the prior year
period:
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP net
earnings
|
$
331.6
|
|
$
354.3
|
|
$
820.3
|
|
$ 1,067.4
|
Add
adjustments:
|
|
|
|
|
|
|
|
Income tax
provision
|
70.6
|
|
73.2
|
|
237.6
|
|
276.9
|
Interest expense
(a)
|
141.5
|
|
153.2
|
|
432.2
|
|
445.3
|
Depreciation and
amortization (b)
|
679.4
|
|
699.5
|
|
2,096.1
|
|
2,157.8
|
EBITDA
|
$ 1,223.1
|
|
$ 1,280.2
|
|
$ 3,586.2
|
|
$ 3,947.4
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
43.1
|
|
29.1
|
|
124.9
|
|
86.8
|
Litigation settlements
and other contingencies, net
|
(26.1)
|
|
(3.9)
|
|
(36.5)
|
|
13.2
|
Restructuring,
acquisition and divestiture-related and other special items
(c)
|
120.0
|
|
192.4
|
|
332.1
|
|
518.8
|
Adjusted
EBITDA
|
$ 1,360.1
|
|
$ 1,497.8
|
|
$ 4,006.7
|
|
$ 4,566.2
|
___________
|
(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
|
|
September
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
Currency
Impact (1)
|
|
2023
Constant
Currency
Revenues
|
|
Constant
Currency
% Change (2)
|
|
2022
Biosimilars (3)
|
|
2022
Adjusted
Ex
Biosimilars (5)
|
|
Divestiture-
Adjusted
Operational
Change (6)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
$ 2,408.5
|
|
$ 2,431.5
|
|
(1) %
|
|
$ (85.0)
|
|
$
2,323.5
|
|
(4) %
|
|
$
162.9
|
|
$ 2,268.6
|
|
2 %
|
Greater
China
|
548.4
|
|
574.0
|
|
(4) %
|
|
23.7
|
|
572.1
|
|
— %
|
|
0.2
|
|
573.8
|
|
— %
|
JANZ
|
334.5
|
|
383.0
|
|
(13) %
|
|
18.9
|
|
353.4
|
|
(8) %
|
|
5.1
|
|
377.9
|
|
(6) %
|
Emerging
Markets
|
642.5
|
|
678.9
|
|
(5) %
|
|
35.8
|
|
678.3
|
|
— %
|
|
12.8
|
|
666.1
|
|
2 %
|
Total net
sales
|
$ 3,933.9
|
|
$ 4,067.4
|
|
(3) %
|
|
$
(6.6)
|
|
$
3,927.3
|
|
(3) %
|
|
$
181.0
|
|
$ 3,886.4
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(7)
|
8.0
|
|
10.8
|
|
NM
|
|
(0.3)
|
|
7.7
|
|
NM
|
|
|
|
|
|
|
Consolidated total
revenues (8)
|
$ 3,941.9
|
|
$ 4,078.2
|
|
(3) %
|
|
$
(6.9)
|
|
$
3,935.0
|
|
(3) %
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
September
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
|
$ 6,932.7
|
|
$ 7,386.7
|
|
(6) %
|
|
$ (23.7)
|
|
$
6,909.0
|
|
(6) %
|
|
$
449.4
|
|
$
13.9
|
|
$ 6,923.4
|
|
— %
|
Greater
China
|
1,645.1
|
|
1,695.4
|
|
(3) %
|
|
85.1
|
|
1,730.2
|
|
2 %
|
|
0.6
|
|
(4.2)
|
|
1,699.0
|
|
2 %
|
JANZ
|
1,052.2
|
|
1,233.9
|
|
(15) %
|
|
77.6
|
|
1,129.8
|
|
(8) %
|
|
14.7
|
|
(9.7)
|
|
1,228.9
|
|
(8) %
|
Emerging
Markets
|
1,932.5
|
|
2,035.0
|
|
(5) %
|
|
143.1
|
|
2,075.6
|
|
2 %
|
|
42.8
|
|
—
|
|
1,992.2
|
|
4 %
|
Total net
sales
|
$
11,562.5
|
|
$
12,351.0
|
|
(6) %
|
|
$ 282.1
|
|
$
11,844.6
|
|
(4) %
|
|
$
507.5
|
|
$ —
|
|
$
11,843.5
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(7)
|
27.1
|
|
35.7
|
|
NM
|
|
0.1
|
|
27.2
|
|
NM
|
|
|
|
|
|
|
|
|
Consolidated total
revenues (8)
|
$
11,589.6
|
|
$
12,386.7
|
|
(6) %
|
|
$ 282.2
|
|
$
11,871.8
|
|
(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 September 30, 2023, other revenues in Developed Markets,
JANZ, and Emerging Markets were approximately $6.4 million,
$0.2 million, and $1.4 million, respectively. For the
nine months ended September 30, 2023, other revenues in Developed
Markets, JANZ, and Emerging Markets were approximately
$19.5 million, $0.8 million, and $6.8 million,
respectively.
|
(8)
|
Amounts exclude
intersegment revenue which eliminates on a consolidated
basis.
|
Reconciliation of
Income Statement Line Items
|
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP cost of
sales
|
$
2,250.6
|
|
$ 2,329.8
|
|
$ 6,747.5
|
|
$ 7,163.8
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
related amortization
|
(602.0)
|
|
(626.7)
|
|
(1,864.7)
|
|
(1,930.4)
|
Acquisition and
divestiture-related items
|
(14.1)
|
|
(16.3)
|
|
(26.7)
|
|
(41.1)
|
Restructuring related
costs
|
(9.1)
|
|
(8.6)
|
|
(88.9)
|
|
(28.4)
|
Share-based
compensation expense
|
(0.7)
|
|
(0.4)
|
|
(2.2)
|
|
(1.2)
|
Other special
items
|
(16.7)
|
|
(68.9)
|
|
(91.9)
|
|
(150.4)
|
Adjusted cost of
sales
|
$
1,608.0
|
|
$ 1,608.9
|
|
$ 4,673.1
|
|
$ 5,012.3
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$
2,333.9
|
|
$ 2,469.3
|
|
$ 6,916.5
|
|
$ 7,374.4
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
59 %
|
|
61 %
|
|
60 %
|
|
60 %
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP
R&D
|
$
211.2
|
|
$
174.9
|
|
$
602.4
|
|
$
479.8
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition and
divestiture-related costs
|
(2.2)
|
|
(2.6)
|
|
(9.2)
|
|
(6.3)
|
Share-based
compensation expense
|
(1.5)
|
|
(1.1)
|
|
(4.0)
|
|
(4.1)
|
SG&A and R&D
TSA reimbursement (c)
|
(8.6)
|
|
—
|
|
(27.0)
|
|
—
|
Other special
items
|
(0.3)
|
|
—
|
|
(2.7)
|
|
(0.9)
|
Adjusted
R&D
|
$
198.6
|
|
$
171.2
|
|
$
559.5
|
|
$
468.5
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
5 %
|
|
4 %
|
|
5 %
|
|
4 %
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP
SG&A
|
$ 1,053.5
|
|
$ 1,017.3
|
|
$ 3,044.3
|
|
$ 2,913.7
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition and
divestiture-related costs
|
(99.4)
|
|
(80.4)
|
|
(194.1)
|
|
(258.9)
|
Restructuring and
related costs
|
(5.8)
|
|
(6.4)
|
|
(9.8)
|
|
(13.6)
|
Purchase accounting
amortization and other related items
|
—
|
|
—
|
|
—
|
|
(0.1)
|
Share-based
compensation expense
|
(40.9)
|
|
(27.5)
|
|
(118.7)
|
|
(81.5)
|
SG&A and R&D
TSA reimbursement (c)
|
(27.6)
|
|
—
|
|
(79.8)
|
|
—
|
Other special items
and reclassifications
|
(2.7)
|
|
(19.9)
|
|
(34.0)
|
|
(44.3)
|
Adjusted
SG&A
|
$
877.1
|
|
$
883.1
|
|
$ 2,607.9
|
|
$ 2,515.3
|
|
|
|
|
|
|
|
|
Adjusted SG&A as %
of total revenues
|
22 %
|
|
22 %
|
|
23 %
|
|
20 %
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP total
operating expenses
|
$ 1,239.6
|
|
$ 1,188.3
|
|
$ 3,621.4
|
|
$ 3,406.7
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Litigation settlements
and other contingencies, net
|
26.1
|
|
3.9
|
|
36.5
|
|
(13.2)
|
R&D
adjustments
|
(12.6)
|
|
(3.7)
|
|
(42.9)
|
|
(11.3)
|
SG&A
adjustments
|
(176.4)
|
|
(134.2)
|
|
(436.4)
|
|
(398.4)
|
Adjusted total
operating expenses
|
$ 1,076.7
|
|
$ 1,054.3
|
|
$ 3,178.6
|
|
$ 2,983.8
|
|
|
|
|
|
|
|
|
Adjusted earnings from
operations (b)
|
$ 1,257.2
|
|
$ 1,415.0
|
|
$ 3,737.9
|
|
$ 4,390.6
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP interest
expense
|
$
141.5
|
|
$
153.2
|
|
$
432.2
|
|
$
445.3
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Accretion of
contingent consideration liability
|
(2.0)
|
|
(1.8)
|
|
(6.3)
|
|
(5.6)
|
Amortization of
premiums and discounts on long-term debt
|
13.7
|
|
12.8
|
|
40.8
|
|
45.7
|
Other special
items
|
(1.0)
|
|
(1.1)
|
|
(3.0)
|
|
(3.3)
|
Adjusted interest
expense
|
$
152.2
|
|
$
163.1
|
|
$
463.7
|
|
$
482.1
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP other
(income) expense, net
|
$
(92.0)
|
|
$
(20.6)
|
|
$ (269.4)
|
|
$
26.6
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Fair value adjustments
on non-marketable equity investments (d)
|
19.1
|
|
—
|
|
115.1
|
|
—
|
SG&A and R&D
TSA reimbursement (c)
|
36.2
|
|
—
|
|
106.8
|
|
—
|
Other items
|
7.3
|
|
6.3
|
|
(1.1)
|
|
8.2
|
Adjusted other (income)
expense, net
|
$
(29.4)
|
|
$
(14.3)
|
|
$
(48.6)
|
|
$
34.8
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP earnings
before income taxes
|
$
402.2
|
|
$
427.5
|
|
$ 1,057.9
|
|
$ 1,344.3
|
Total pre-tax non-GAAP
adjustments
|
732.1
|
|
838.5
|
|
2,264.8
|
|
2,529.3
|
Adjusted earnings
before income taxes
|
$ 1,134.3
|
|
$ 1,266.0
|
|
$ 3,322.7
|
|
$ 3,873.6
|
|
|
|
|
|
|
|
|
U.S. GAAP income tax
provision
|
$
70.6
|
|
$
73.2
|
|
$
237.6
|
|
$
276.9
|
Adjusted tax
expense
|
110.9
|
|
129.4
|
|
294.0
|
|
342.7
|
Adjusted income tax
provision
|
$
181.5
|
|
$
202.6
|
|
$
531.6
|
|
$
619.6
|
|
|
|
|
|
|
|
|
Adjusted effective tax
rate
|
16.0 %
|
|
16.0 %
|
|
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)
|
Refer to "Certain Key
Terms and Presentation Matters" section in this release for more
information on reclassifications related to TSA
reimbursements.
|
(d)
|
For the three months
ended September 30, 2023, includes a gain of approximately
$19.1 million as a result of remeasuring the CCPS in Biocon
Biologics to fair value. For the nine months ended
September 30, 2023, includes gains of approximately
$115.1 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.