Viatris Reports Strong Financial and Operational Results for Second Quarter 2023 and Reaffirms Full-Year 2023 Guidance Ranges[1]
- The company reports strong total revenues and net earnings for the quarter, reaffirms full-year expectations, pays down significant debt, and declares a quarterly dividend, all indicating a positive financial position and outlook for Viatris Inc.
- None.
- Reports Total Revenues of
;$3.92 Billion U.S. GAAP Net Earnings of ; Adjusted EBITDA of$264 Million ;$1.31 Billion U.S. GAAP Net Cash Provided by Operating Activities of ; and Free Cash Flow of$515 Million for the Quarter$447 Million - Strong Results Signal Expected Beginning of Growth Journey
- Reaffirms that Full-Year Total Revenues, Adjusted EBITDA and Free Cash Flow Expected to be at Midpoint of 2023 Guidance Ranges[1]
- Pays Down
of Debt Year to Date$727 Million - Remains on Track to Announce Planned Divestitures in 2023
- Board of Directors Declares Quarterly Dividend of
per Share$0.12
Executive Commentary
Viatris CEO Scott A. Smith said: "Obviously, I could not be more pleased with our overall execution in the second quarter—one of the strongest quarters we've had to date at Viatris. These results signal what we expect to be the beginning of a growth journey for Viatris and set us up well for future success. As proud as I am of our strong performance, the foundation the Company has built and the stability and predictability we believe have clearly been achieved, my focus is on the future trajectory of the Company. I'm pleased to say we believe we are currently on track to announce all planned divestitures in 2023, including at least one significant divestiture in the third quarter, possibly more. The Company has laid out clear capital allocation and business development priorities for Phase 2 and we are fully dedicated to meeting these priorities to propel Viatris up the value chain and increase our return of capital to shareholders."
Viatris President Rajiv Malik said: "Our performance this quarter highlights our Company's momentum like never before and further reinforces the predictability in our base business. Our strong and highly diversified business model of bringing access has never depended on any one product, portfolio or market. We believe this diversity lays a solid foundation for growth in Phase 2, beginning in 2024. We continue to execute and are making consistent progress on our deep pipeline and are on track to meet our full-year 2023 new product revenue target. In addition, I would be remiss not to call out our significant achievement of another first with our launch of Breyna, our generic Symbicort, in July."
Viatris CFO Sanjeev Narula said: "We are pleased with our strong fundamentals and continued excellent operational performance. It was another solid quarter of free cash flow generation which allowed us to deliver on our capital allocation priorities. We continue to prioritize deleveraging the balance sheet with
Return of Capital to Shareholders
Viatris announced that, on August 4, 2023, its Board of Directors declared a quarterly dividend of
Viatris paid a quarterly cash dividend of
Conference Call and Earnings Materials
Viatris Inc. will host a conference call and live webcast, today at 8:30 a.m. ET, to discuss the Company's financial results for the second quarter of 2023.
Investors and the general public are invited to listen to a live webcast of the call at investor.viatris.com or by calling 800-274-8461 or 203-518-9783 for international callers (Conference ID: VTRSQ223). The "Viatris Q2 Earnings Presentation," which will be referenced during the call, can be found at investor.viatris.com. A replay of the webcast also will be available on the website.
[1] Viatris is not providing forward-looking guidance for
Financial Summary | |||||||||
Three Months Ended | |||||||||
June 30, | |||||||||
(Unaudited; in millions, except %s) | 2023 | 2022 | Reported | Operational | Divestiture | ||||
Total Net Sales | (5) % | (3) % | 1 % | ||||||
Developed Markets | 2,353.8 | 2,479.1 | (5) % | (6) % | 1 % | ||||
Emerging Markets | 648.1 | 650.9 | — % | 8 % | 10 % | ||||
JANZ | 375.5 | 427.1 | (12) % | (6) % | (7) % | ||||
532.1 | 548.3 | (3) % | 2 % | 1 % | |||||
Net Sales by Product Category | |||||||||
Brands | (2) % | — % | — % | ||||||
Complex Gx | 139.2 | 354.8 | (61) % | (61) % | (27) % | ||||
Generics | 1,325.6 | 1,267.5 | 5 % | 8 % | 8 % | ||||
(6) % | |||||||||
41.1 % | 41.4 % | ||||||||
Adjusted Gross Profit (3) | (3) % | ||||||||
Adjusted Gross Margin (3) | 59.5 % | 58.6 % | |||||||
$ 264.0 | $ 313.9 | (16) % | |||||||
Adjusted Net Earnings (3) | $ 905.4 | (15) % | |||||||
EBITDA (3) | (7) % | ||||||||
Adjusted EBITDA (3) | (12) % | (9) % | (8) % | ||||||
$ 514.9 | $ 802.5 | (36) % | |||||||
Capital expenditures | 67.8 | 83.9 | (19) % | ||||||
Free cash flow (3) | $ 447.1 | $ 718.6 | (38) % | ||||||
Six Months Ended | |||||||||
June 30, | |||||||||
(Unaudited; in millions, except %s) | 2023 | 2022 | Reported | Operational | Divestiture | ||||
Total Net Sales | (8) % | (4) % | — % | ||||||
Developed Markets | 4,524.2 | 4,955.2 | (9) % | (7) % | (1) % | ||||
Emerging Markets | 1,290.0 | 1,356.1 | (5) % | 3 % | 5 % | ||||
JANZ | 717.7 | 850.9 | (16) % | (9) % | (9) % | ||||
1,096.7 | 1,121.4 | (2) % | 3 % | 3 % | |||||
Net Sales by Product Category | |||||||||
Brands | (3) % | — % | — % | ||||||
Complex Gx | 275.3 | 745.6 | (63) % | (63) % | (34) % | ||||
Generics | 2,488.3 | 2,500.8 | — % | 4 % | 4 % | ||||
(9) % | |||||||||
41.2 % | 41.8 % | ||||||||
Adjusted Gross Profit (3) | (7) % | ||||||||
Adjusted Gross Margin (3) | 59.9 % | 59.0 % | |||||||
$ 488.7 | $ 713.1 | (31) % | |||||||
Adjusted Net Earnings (3) | (16) % | ||||||||
EBITDA (3) | (11) % | ||||||||
Adjusted EBITDA (3) | (14) % | (10) % | (8) % | ||||||
(23) % | |||||||||
Capital expenditures | 115.6 | 148.4 | (22) % | ||||||
Free cash flow (3) | (24) % |
___________ | |
(1) | Represents operational change for net sales and adjusted EBITDA which excludes the impacts of foreign currency translation. See "Certain Key Terms and Presentation Matters" in this release for more information. |
(2) | Represents adjustments for impact of the biosimilars divestitures in November 2022 on an operational basis and a reclassification. See "Certain Key Terms and Presentation Matters" in this release for more information. |
(3) | Non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information. |
Financial Highlights
- Second quarter 2023 total net sales totaled
, up$3.9 billion 1% on a divestiture adjusted operational basis (as defined in "Certain Key Terms and Presentation Matters" below) compared to Q2 2022 results. - Brands performed in line with expectations, reflecting strong year-over-year performance in key brands including Yupelri® and sales from Tyrvaya®.
- Complex generics performed in line with expectations.
- Generics, which include diversified product forms such as oral solids, injectables, transdermals and topicals, performed ahead of expectations, due to strong performance across broader Developed and Emerging Markets portfolios.
- The Company generated approximately
in new product revenues (as defined in "Certain Key Terms and Presentation Matters" below) in the second quarter (approximately$124 million for the first half of the year) primarily driven by lenalidomide in the$209 million U.S. and is on track to achieve approximately in new product revenues in 2023.$500 million - The Company had
U.S. GAAP net cash provided by operating activities of in the second quarter ($515 million for the first half of year) and generated$1.49 billion of free cash flow in the second quarter ($447 million for the first half of year), primarily driven by strong operating results and the timing of planned capital expenditures.$1.37 billion U.S. GAAP net cash provided by operating activities and free cash flow for the second quarter included approximately ($9 million for the first half of the year) of transaction costs primarily related to the eye care acquisitions and the biosimilars divestiture and approximately$31 million (same for the first half of the year) related to acquired IPR&D.$10 million - The Company paid down
in debt in the second quarter ($181 million for the first half of the year). The Company remains fully committed to maintaining its investment grade credit rating.$727 million
2023 Financial Guidance
Viatris is reaffirming its 2023 financial guidance that was previously provided on February 27, 2023, as set forth below. The Company is not providing forward-looking guidance for
(In billions) | 2023 Guidance Range (2) | 2023 Midpoint | ||
Total Revenues | ||||
Adjusted EBITDA (1) | ||||
Free Cash Flow (1) |
(1) | Non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information. |
(2) | Includes the full year expected performance for the planned divestitures and excludes any potential related costs, such as taxes and transaction costs, as well as any similar costs related to the eye care acquisitions. Also excludes any acquired IPR&D for unsigned deals. |
Certain Key Terms and Presentation Matters
New product sales, new product launches or new product revenues: Refers to revenue from new products launched in 2023 and the carryover impact of new products, including business development, launched within the last twelve months.
Operational change: Refers to constant currency percentage changes and is derived by translating amounts for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2023 constant currency net sales, revenues and adjusted EBITDA to the corresponding amount in the prior year.
Divestiture adjusted operational change: Refers to operational changes, further adjusted for the impact of the biosimilars divestiture in November 2022 by excluding biosimilars net sales from 2022 periods, and a reclassification to conform prior year amounts to current year presentation of divestiture adjusted operational net sales.
SG&A and R&D TSA reimbursement: Expenses related to TSA services provided to Biocon Biologics are recorded in their respective functional line item; however, reimbursement of those expenses plus the mark-up is included in other (income) expense, net. For comparability purposes, amounts related to the cost reimbursement are reclassified to adjusted SG&A and adjusted R&D. This reclassification has no impact on adjusted net earnings or adjusted EBITDA.
Non-GAAP Financial Measures
This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in
The Company is not providing forward-looking
About Viatris
Viatris Inc. (NASDAQ: VTRS) is a global healthcare company empowering people worldwide to live healthier at every stage of life. We provide access to medicines, advance sustainable operations, develop innovative solutions and leverage our collective expertise to connect more people to more products and services through our one-of-a-kind Global Healthcare Gateway®. Formed in November 2020, Viatris brings together scientific, manufacturing and distribution expertise with proven regulatory, medical, and commercial capabilities to deliver high-quality medicines to patients in more than 165 countries and territories. Viatris' portfolio comprises more than 1,400 approved molecules across a wide range of therapeutic areas, spanning both non-communicable and infectious diseases, including globally recognized brands, complex generic and branded medicines and a variety of over-the-counter consumer products. With more than 38,000 colleagues globally, Viatris is headquartered in the
Forward-Looking Statements
This release contains "forward-looking statements". These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, 2023 financial guidance; reaffirming that full-year total revenues, adjusted EBITDA and free cash flow are expected to be at midpoint of 2023 guidance ranges; strong results signal expected beginning of growth journey; remains on track to announced planned divestitures in 2023; reported another strong quarter of operating results which continues to set the Company up well as it prepares to bring its Phase 1 strategy to an end and position itself for a strong beginning of Phase 2 in 2024 and beyond; these results signal what we expect to be the beginning of a growth journey for Viatris and set us up well for future success; as proud as I am of our strong performance, the foundation the Company has built and the stability and predictability we believe have clearly been achieved, my focus is on the future trajectory of the Company; I'm pleased to say we believe we are currently on track to announce all planned divestitures in 2023, including at least one significant divestiture in the third quarter, possibly more; the Company has laid out clear capital allocation and business development priorities for Phase 2 and we are fully dedicated to meeting these priorities to propel Viatris up the value chain and increase our return of capital to shareholders; our performance this quarter highlights our Company's momentum like never before and further reinforces the predictability in our base business; our strong and highly diversified business model of bringing access has never depended on any one product, portfolio or market; we believe this diversity lays a solid foundation for growth in Phase 2, beginning in 2024; we continue to execute and are making consistent progress on our deep pipeline and are on track to meet our full-year 2023 new product revenue target; we continue to prioritize deleveraging the balance sheet with
In particular, certain statements in this release relate to Viatris' Phase 2 strategy in 2024 and beyond and its related goals, targets, forecasts, objectives and commitments (such statements, the "Phase 2 Outlooks"). Viatris believes that the assumptions used as a basis for these Phase 2 Outlooks are reasonable based on the information available to management at this time. However, this information is not fact, and you are cautioned not to place undue reliance on any such information. While certain of these statements might use language that imply a level of certainty about the likelihood that Viatris will attain these Phase 2 Outlooks, it is possible that Viatris will not attain them in the timeframe noted or at all. These Phase 2 Outlooks reflect assumptions as to certain business decisions that are subject to change. Important factors that may affect actual results and cause these Phase 2 Outlooks not to be achieved, or that may change the underlying variables and assumptions on which these Phase 2 Outlooks were based and cause these Phase 2 Outlooks to differ materially, include, but are not limited to, risks and uncertainties relating to our planned acquisitions and divestitures, including whether such transactions are completed on the expected timelines or at all, failure to achieve the anticipated benefits of any acquisitions or divestitures, failure to receive the anticipated cash proceeds of any divestitures, inability to manage base business erosion, failure to bring new products to market on the expected timeframes or at all, failure to execute stock repurchases consistent with current expectations, stock price volatility, higher than anticipated SG&A, gross margins and R&D spend, industry performance, interest rate volatility, foreign exchange rates, tax rates, the regulatory environment and general business and economic conditions, as well as those set forth in the first paragraph of "Forward-Looking Statements". In addition, although certain of the outlooks are presented with numerical specificity, they are still forward-looking statements that involve inherent risks and uncertainties. Further, these Phase 2 Outlooks cover multiple years and such information by its nature becomes less reliable with each successive year. Accordingly, there can be no assurance that any aspect of these Phase 2 Outlooks will be realized or that actual results will not differ materially. Therefore, you should construe these statements regarding these Phase 2 Outlooks only as goals, targets and objectives rather than promises of future performance or absolute statements.
Viatris Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||
Revenues: | |||||||
Net sales | $ 3,909.5 | $ 4,105.4 | $ 7,628.6 | $ 8,283.6 | |||
Other revenues | 9.1 | 11.4 | 19.1 | 24.9 | |||
Total revenues | 3,918.6 | 4,116.8 | 7,647.7 | 8,308.5 | |||
Cost of sales | 2,310.0 | 2,413.5 | 4,496.9 | 4,834.0 | |||
Gross profit | 1,608.6 | 1,703.3 | 3,150.8 | 3,474.5 | |||
Operating expenses: | |||||||
Research and development | 208.3 | 162.6 | 391.2 | 304.9 | |||
Acquired IPR&D | 10.2 | — | 10.2 | — | |||
Selling, general and administrative | 1,031.9 | 981.1 | 1,990.8 | 1,896.4 | |||
Litigation settlements and other contingencies, net | (11.0) | 10.9 | (10.4) | 17.1 | |||
Total operating expenses | 1,239.4 | 1,154.6 | 2,381.8 | 2,218.4 | |||
Earnings from operations | 369.2 | 548.7 | 769.0 | 1,256.1 | |||
Interest expense | 143.7 | 145.9 | 290.7 | 292.1 | |||
Other (income) expense, net | (107.5) | 13.5 | (177.4) | 47.2 | |||
Earnings before income taxes | 333.0 | 389.3 | 655.7 | 916.8 | |||
Income tax provision | 69.0 | 75.4 | 167.0 | 203.7 | |||
Net earnings | $ 264.0 | $ 313.9 | $ 488.7 | $ 713.1 | |||
Earnings per share attributable to Viatris Inc. shareholders | |||||||
Basic | $ 0.22 | $ 0.26 | $ 0.41 | $ 0.59 | |||
Diluted | $ 0.22 | $ 0.26 | $ 0.41 | $ 0.59 | |||
Weighted average shares outstanding: | |||||||
Basic | 1,199.0 | 1,212.3 | 1,200.8 | 1,211.4 | |||
Diluted | 1,203.5 | 1,217.1 | 1,204.6 | 1,215.1 |
Viatris Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) | |||
(In millions) | June 30, | December 31, | |
ASSETS | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 629.2 | $ 1,259.9 | |
Accounts receivable, net | 3,607.3 | 3,814.5 | |
Inventories | 3,641.5 | 3,519.5 | |
Prepaid expenses and other current assets | 1,725.1 | 1,811.2 | |
Assets held for sale | 174.9 | 230.3 | |
Total current assets | 9,778.0 | 10,635.4 | |
Intangible assets, net | 22,084.4 | 22,607.1 | |
Goodwill | 10,532.5 | 10,425.8 | |
Other non-current assets | 6,300.3 | 6,353.9 | |
Total assets | $ 48,695.2 | $ 50,022.2 | |
LIABILITIES AND EQUITY | |||
Liabilities | |||
Current portion of long-term debt and other long-term obligations | $ 1,334.4 | $ 1,259.1 | |
Other current liabilities | 5,189.4 | 5,487.1 | |
Long-term debt | 17,246.0 | 18,015.2 | |
Other non-current liabilities | 4,082.1 | 4,188.5 | |
Total liabilities | 27,851.9 | 28,949.9 | |
Shareholders' equity | 20,843.3 | 21,072.3 | |
Total liabilities and equity | $ 48,695.2 | $ 50,022.2 |
Viatris Inc. and Subsidiaries | |||||
Key Product Net Sales, on a Consolidated Basis | |||||
(Unaudited) | |||||
Three months ended | Six months ended | ||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |
Select Key Global Products | |||||
Lipitor ® | $ 380.0 | $ 405.6 | $ 797.9 | $ 845.7 | |
Norvasc ® | 182.4 | 203.0 | 385.1 | 410.8 | |
Lyrica ® | 137.1 | 155.8 | 281.4 | 327.4 | |
EpiPen® Auto-Injectors | 127.5 | 106.5 | 223.3 | 195.3 | |
Viagra ® | 111.0 | 115.1 | 226.0 | 244.9 | |
Celebrex ® | 82.0 | 85.9 | 170.8 | 171.2 | |
Creon ® | 74.1 | 75.4 | 146.8 | 150.1 | |
Effexor ® | 64.8 | 73.7 | 129.4 | 151.2 | |
Zoloft ® | 54.5 | 62.5 | 111.0 | 135.6 | |
Xalabrands | 50.4 | 42.7 | 97.1 | 95.7 | |
Select Key Segment Products | |||||
Dymista ® | $ 57.7 | $ 55.5 | $ 110.9 | $ 99.4 | |
Yupelri ® | 55.0 | 49.1 | 102.0 | 92.7 | |
Xanax ® | 51.8 | 37.2 | 91.5 | 77.2 | |
Amitiza ® | 41.5 | 44.1 | 78.1 | 85.9 |
____________ | |
(a) | The Company does not disclose net sales for any products considered competitively sensitive. |
(b) | Products disclosed may change in future periods, including as a result of seasonality, competition or new product launches. |
(c) | Amounts for the three and six months ended June 30, 2023 include the unfavorable impact of foreign currency translations compared to the prior year period. |
Viatris Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Measures (Unaudited) | |||||||
Reconciliation of | |||||||
Below is a reconciliation of | |||||||
Three Months Ended June | Six Months Ended June | ||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||
$ 264.0 | $ 313.9 | $ 488.7 | $ 713.1 | ||||
Purchase accounting related amortization (primarily included in cost of sales) (a) | 609.3 | 644.9 | 1,262.6 | 1,303.8 | |||
Litigation settlements and other contingencies, net | (11.0) | 10.9 | (10.4) | 17.1 | |||
Interest expense (primarily amortization of premiums and discounts on long term debt) | (10.5) | (13.1) | (20.8) | (26.8) | |||
Clean energy investments pre-tax gain | — | 0.1 | — | — | |||
Acquisition and divestiture related costs (primarily included in SG&A) (b) | 56.3 | 122.4 | 114.4 | 207.1 | |||
Restructuring related costs (c) | 74.1 | 10.2 | 83.8 | 27.0 | |||
Share-based compensation expense | 39.2 | 29.4 | 81.8 | 57.7 | |||
Other special items included in: | |||||||
Cost of sales (d) | 36.4 | 40.5 | 75.2 | 81.5 | |||
Research and development expense | 0.4 | 0.6 | 2.4 | 0.9 | |||
Selling, general and administrative expense | 16.4 | 17.0 | 31.3 | 24.4 | |||
Other income, net (e) | (65.8) | (0.4) | (87.6) | (1.9) | |||
Tax effect of the above items and other income tax related items (f) | (103.4) | (111.1) | (183.1) | (213.3) | |||
Adjusted net earnings | $ 905.4 | $ 1,065.3 | $ 1,838.3 | $ 2,190.6 |
____________ | |
Significant items include the following: | |
(a) | For the six months ended June 30, 2023, charges include an intangible asset charge of approximately |
(b) | Acquisition and divestiture related costs consist primarily of transaction costs including legal and consulting fees and integration activities. |
(c) | For the three and six months ended June 30, 2023, charges include approximately |
(d) | For the three and six months ended June 30, 2023, charges include incremental manufacturing variances at plants in the 2020 restructuring program of approximately |
(e) | For the three months ended June 30, 2023, includes gains of approximately |
(f) | Adjusted for changes for uncertain tax positions. |
Reconciliation of | |||||||
Below is a reconciliation of | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||
$ 264.0 | $ 313.9 | $ 488.7 | $ 713.1 | ||||
Add adjustments: | |||||||
Net contribution attributable to equity method investments | — | 0.1 | — | — | |||
Income tax provision | 69.0 | 75.4 | 167.0 | 203.7 | |||
Interest expense (a) | 143.7 | 145.9 | 290.7 | 292.1 | |||
Depreciation and amortization (b) | 686.7 | 722.3 | 1,416.7 | 1,458.3 | |||
EBITDA | $ 1,163.4 | $ 1,257.6 | $ 2,363.1 | $ 2,667.2 | |||
Add / (deduct) adjustments: | |||||||
Share-based compensation expense | 39.2 | 29.4 | 81.8 | 57.7 | |||
Litigation settlements and other contingencies, net | (11.0) | 10.9 | (10.4) | 17.1 | |||
Restructuring, acquisition and divestiture related and other special items (c) | 114.1 | 184.2 | 212.1 | 326.4 | |||
Adjusted EBITDA | $ 1,305.7 | $ 1,482.1 | $ 2,646.6 | $ 3,068.4 |
___________ | |
(a) | Includes amortization of premiums and discounts on long-term debt. |
(b) | Includes purchase accounting related amortization. |
(c) | See items detailed in the Reconciliation of |
Summary of Total Revenues by Segment | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
June 30, | |||||||||||||||||||
(In millions, except %s) | 2023 | 2022 | % Change | 2023 | 2023 | Constant | 2022 | Other | 2022 | Divestiture | |||||||||
Net sales | |||||||||||||||||||
Developed Markets | (5) % | $ (11.9) | $ 2,341.9 | (6) % | $ 142.0 | $ 13.9 | $ 2,323.2 | 1 % | |||||||||||
532.1 | 548.3 | (3) % | 26.3 | 558.4 | 2 % | 0.3 | (4.2) | 552.2 | 1 % | ||||||||||
JANZ | 375.5 | 427.1 | (12) % | 25.2 | 400.7 | (6) % | 5.0 | (9.7) | 431.8 | (7) % | |||||||||
Emerging Markets | 648.1 | 650.9 | — % | 52.0 | 700.1 | 8 % | 14.5 | — | 636.4 | 10 % | |||||||||
Total net sales | (5) % | $ 91.6 | $ 4,001.1 | (3) % | $ 161.8 | $ — | $ 3,943.6 | 1 % | |||||||||||
Other revenues (7) | 9.1 | 11.4 | NM | — | 9.1 | NM | |||||||||||||
Consolidated total revenues (8) | (5) % | $ 91.6 | $ 4,010.2 | (3) % | |||||||||||||||
Six Months Ended | |||||||||||||||||||
June 30, | |||||||||||||||||||
(In millions, except %s) | 2023 | 2022 | % Change | 2023 | 2023 | Constant | 2022 | Other | 2022 | Divestiture | |||||||||
Net sales | |||||||||||||||||||
Developed Markets | (9) % | $ 61.3 | $ 4,585.6 | (7) % | $ 286.6 | $ 13.9 | $ 4,654.7 | (1) % | |||||||||||
1,096.7 | 1,121.4 | (2) % | 61.3 | 1,158.0 | 3 % | 0.4 | (4.2) | 1,125.2 | 3 % | ||||||||||
JANZ | 717.7 | 850.9 | (16) % | 58.8 | 776.4 | (9) % | 9.6 | (9.7) | 851.0 | (9) % | |||||||||
Emerging Markets | 1,290.0 | 1,356.1 | (5) % | 107.3 | 1,397.3 | 3 % | 30.0 | — | 1,326.1 | 5 % | |||||||||
Total net sales | (8) % | $ 288.7 | $ 7,917.3 | (4) % | $ 326.6 | $ — | $ 7,957.0 | — % | |||||||||||
Other revenues (7) | 19.1 | 24.9 | NM | 0.4 | 19.5 | NM | |||||||||||||
Consolidated total revenues (8) | (8) % | $ 289.1 | $ 7,936.8 | (4) % |
____________ | |
(1) | Currency impact is shown as unfavorable (favorable). |
(2) | The constant currency percentage change is derived by translating net sales or revenues for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2023 constant currency net sales or revenues to the corresponding amount in the prior year. |
(3) | Represents biosimilars net sales in the relevant period. |
(4) | Represents a reclassification to conform prior year amounts to current year presentation of divestiture adjusted operational net sales. |
(5) | Represents |
(6) | See "Certain Key Terms and Presentation Matters" in this release for more information. |
(7) | For the three months ended June 30, 2023, other revenues in Developed Markets, JANZ, and Emerging Markets were approximately |
(8) | Amounts exclude intersegment revenue which eliminates on a consolidated basis. |
Reconciliation of Income Statement Line Items | |||||||
(Unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions, except %s) | 2023 | 2022 | 2023 | 2022 | |||
$ 2,310.0 | $ 2,413.5 | $ 4,496.9 | $ 4,834.0 | ||||
Deduct: | |||||||
Purchase accounting related amortization | (609.3) | (644.9) | (1,262.7) | (1,303.7) | |||
Acquisition and divestiture related items | (7.6) | (15.8) | (12.6) | (24.8) | |||
Restructuring related costs | (68.9) | (6.7) | (79.8) | (19.8) | |||
Share-based compensation expense | (0.9) | (0.5) | (1.5) | (0.8) | |||
Other special items | (36.4) | (40.5) | (75.2) | (81.5) | |||
Adjusted cost of sales | $ 1,586.9 | $ 1,705.1 | $ 3,065.1 | $ 3,403.4 | |||
Adjusted gross profit (a) | $ 2,331.7 | $ 2,411.7 | $ 4,582.6 | $ 4,905.1 | |||
Adjusted gross margin (a) | 60 % | 59 % | 60 % | 59 % | |||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions, except %s) | 2023 | 2022 | 2023 | 2022 | |||
$ 208.3 | $ 162.6 | $ 391.2 | $ 304.9 | ||||
Deduct: | |||||||
Acquisition and divestiture related costs | (5.0) | (1.7) | (7.0) | (3.7) | |||
Share-based compensation expense | (0.9) | (1.6) | (2.5) | (3.0) | |||
SG&A and R&D TSA reimbursement (d) | (8.1) | — | (18.4) | — | |||
Other special items | (0.4) | (0.6) | (2.4) | (0.9) | |||
Adjusted R&D | $ 193.9 | $ 158.7 | $ 360.9 | $ 297.3 | |||
Adjusted R&D as % of total revenues | 5 % | 4 % | 5 % | 4 % | |||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions, except %s) | 2023 | 2022 | 2023 | 2022 | |||
$ 1,031.9 | $ 981.1 | $ 1,990.8 | $ 1,896.4 | ||||
Deduct: | |||||||
Acquisition and divestiture related costs | (43.6) | (104.7) | (94.7) | (178.5) | |||
Restructuring and related costs | (5.2) | (3.5) | (4.0) | (7.2) | |||
Purchase accounting amortization and other related items | — | — | — | (0.1) | |||
Share-based compensation expense | (37.5) | (27.5) | (77.8) | (54.0) | |||
SG&A and R&D TSA reimbursement (d) | (27.8) | — | (52.2) | — | |||
Other special items and reclassifications | (16.4) | (17.0) | (31.3) | (24.4) | |||
Adjusted SG&A | $ 901.4 | $ 828.4 | $ 1,730.8 | $ 1,632.2 | |||
Adjusted SG&A as % of total revenues | 23 % | 20 % | 23 % | 20 % | |||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||
$ 1,239.4 | $ 1,154.6 | $ 2,381.8 | $ 2,218.4 | ||||
Add / (Deduct): | |||||||
Litigation settlements and other contingencies, net | 11.0 | (10.9) | 10.4 | (17.1) | |||
R&D adjustments | (14.4) | (3.9) | (30.3) | (7.6) | |||
SG&A adjustments | (130.5) | (152.7) | (260.0) | (264.2) | |||
Adjusted total operating expenses | $ 1,105.5 | $ 987.1 | $ 2,101.9 | $ 1,929.5 | |||
Adjusted earnings from operations (b) | $ 1,226.2 | $ 1,424.6 | $ 2,480.7 | $ 2,975.6 | |||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||
$ 143.7 | $ 145.9 | $ 290.7 | $ 292.1 | ||||
Add / (Deduct): | |||||||
Accretion of contingent consideration liability | (2.1) | (1.8) | (4.3) | (3.8) | |||
Amortization of premiums and discounts on long-term debt | 13.6 | 16.1 | 27.1 | 32.9 | |||
Other special items | (1.0) | (1.1) | (2.0) | (2.2) | |||
Adjusted interest expense | $ 154.2 | $ 159.1 | $ 311.5 | $ 319.0 | |||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||
$ (107.5) | $ 13.5 | $ (177.4) | $ 47.2 | ||||
Add / (Deduct): | |||||||
Clean energy investments pre-tax gain (c) | — | (0.1) | — | — | |||
Fair Value adjustments on equity investments (e) | 74.5 | — | 96.0 | — | |||
SG&A and R&D TSA reimbursement (d) | 35.9 | — | 70.6 | — | |||
Other items | (8.7) | 0.4 | (8.4) | 1.9 | |||
Adjusted other (income) expense, net | $ (5.8) | $ 13.8 | $ (19.2) | $ 49.1 | |||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
(In millions, except %s) | 2023 | 2022 | 2023 | 2022 | |||
$ 333.0 | $ 389.3 | $ 655.7 | $ 916.8 | ||||
Total pre-tax non-GAAP adjustments | 744.8 | 862.5 | 1,532.7 | 1,690.8 | |||
Adjusted earnings before income taxes | $ 1,077.8 | $ 1,251.8 | $ 2,188.4 | $ 2,607.6 | |||
$ 69.0 | $ 75.4 | $ 167.0 | $ 203.7 | ||||
Adjusted tax expense | 103.4 | 111.1 | 183.1 | 213.3 | |||
Adjusted income tax provision | $ 172.4 | $ 186.5 | $ 350.1 | $ 417.0 | |||
Adjusted effective tax rate | 16.0 % | 14.9 % | 16.0 % | 16.0 % |
___________ | |
(a) | |
(b) | |
(c) | Adjustment represents exclusion of activity related to Viatris' clean energy investments, the activities of which qualify for income tax credits under section 45 of the |
(d) | Refer to "Certain Key Terms and Presentation Matters" section in this release for more information on reclassifications related to TSA reimbursements. |
(e) | For the three months ended June 30, 2023, includes gains of approximately |
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 | |
Less: Capital Expenditures | |
Free Cash Flow (a) |
___________ | |
(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.
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