- Total Revenues of $3.8 Billion and Operational Revenue Growth of ~3% on a Divestiture-Adjusted Basis Demonstrate Strength of Company’s Base Business[1]
- Strong New Product Revenues of $133 Million Drove Growth Across Segments
- U.S. GAAP Net Earnings were $95 Million; Adjusted EBITDA Grew ~4% to $1.3 Billion on a Divestiture-Adjusted Basis; U.S. GAAP Diluted EPS was $0.08 per Share; Adjusted EPS Grew ~6% to $0.75 per Share on a Divestiture-Adjusted Basis[2]
- Repaid ~$1.9 Billion of Debt, Expects to Achieve its Long-Term Gross Leverage Target of ~3.0x by end of the Year[3]
- Entered into Exclusive Licensing Agreement for Sotagliflozin, Expanding its Innovative Portfolio in Cardiovascular Diseases
- Reaffirms 2024 Full-Year Outlook and Continues to Expect 2024 Full-Year Revenue Growth of ~2% on a Divestiture-Adjusted Operational Basis[4]
Viatris Inc. (Nasdaq: VTRS) today announced robust financial results for the third quarter of 2024, driven by positive momentum against all three pillars of its strategy. The Company continued to demonstrate its ability to grow its base business, delivering total revenues of $3.8 billion including new product revenues of $133 million; it added to its financial strength with the repayment of approximately $1.9 billion of debt; and it expanded its innovative portfolio by entering into an exclusive licensing agreement with Lexicon Pharmaceuticals for sotagliflozin outside of the U.S. and Europe.
“I am very pleased to report strong third quarter results that continue the momentum we’ve seen all year,” said Scott A. Smith, chief executive officer, Viatris. “We are in a period of strong global execution which has led to consistent base business growth and we expect this momentum to continue into next year. Our company is operating from a position of financial strength with a clear and focused outlook that centers on capital allocation. Returning value to shareholders through dividends and share repurchases will remain a central element of optimizing and maximizing shareholder value. We will balance this with making disciplined investments in commercialized or late-stage assets through regional and global business development to drive our future growth.”
“We continue to make excellent progress executing on our debt paydown commitment and are on pace to achieve our long-term gross leverage target of ~3.0x by year end,” said Doretta Mistras, chief financial officer, Viatris. “With sector-leading cash flow and a strong balance sheet as our foundation, I believe we are well-positioned to deliver consistent base business growth, while simultaneously investing in our business and returning significant capital to our shareholders.”
[1] For the quarter ended September 30, 2024, total revenues declined ~(5)% on a U.S. GAAP basis. [2] For the quarter ended September 30, 2024, U.S. GAAP net earnings declined from $332 million to $95 million, or ~(71)%, and U.S. GAAP diluted EPS declined from $0.27 per share to $0.08 per share, or ~(70)%. [3] Debt repayment of ~$1.9 billion includes the impact of the make-whole call of €292M (~$325M) of remaining 2025 Euro Senior Notes on October 16, 2024. The Company has not quantified future amounts to develop its long-term gross leverage target, which does not reflect company guidance, but has stated its goal to manage notional gross debt and adjusted EBITDA over time in order to generally maintain or reach the target. See “Non-GAAP Financial Measures” and “Long-Term Gross Leverage Target” for additional information. [4] U.S. GAAP total revenues for 2024 as of November 7, 2024, are estimated to be between $14.60 and $15.10 billion, with a midpoint of $14.85 billion or a full-year decrease of ~(4)%. See “Financial Guidance” and “Non-GAAP Financial Measures” for additional information.|
Third Quarter Results |
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|
Three Months Ended |
|||||||||
|
September 30, |
|||||||||
|
(Unaudited; in millions, except %s and per share amounts) |
2024 |
2023 |
Reported |
Operational |
Divestiture |
||||
|
Total Net Sales |
$ 3,738.0 |
$ 3,933.9 |
(5) % |
(5) % |
3 % |
||||
|
Developed Markets |
2,298.7 |
2,408.5 |
(5) % |
(5) % |
3 % |
||||
|
Emerging Markets |
533.2 |
642.5 |
(17) % |
(14) % |
2 % |
||||
|
JANZ |
344.3 |
334.5 |
3 % |
6 % |
8 % |
||||
|
Greater China |
561.8 |
548.4 |
2 % |
3 % |
3 % |
||||
|
Net Sales by Product Category |
|||||||||
|
Brands |
$ 2,362.2 |
$ 2,533.1 |
(7) % |
(6) % |
2 % |
||||
|
Generics (4) |
1,375.8 |
1,400.8 |
(2) % |
(2) % |
4 % |
||||
|
U.S. GAAP Gross Profit |
$ 1,459.2 |
$ 1,691.3 |
(14) % |
||||||
|
U.S. GAAP Gross Margin |
38.9 % |
42.9 % |
|||||||
|
Adjusted Gross Profit (2) |
$ 2,192.9 |
$ 2,333.9 |
(6) % |
||||||
|
Adjusted Gross Margin (2) |
58.5 % |
59.2 % |
|||||||
|
U.S. GAAP Net Earnings |
$ 94.8 |
$ 331.6 |
(71) % |
||||||
|
U.S. GAAP Earnings Per Share |
$ 0.08 |
$ 0.27 |
(70) % |
||||||
|
Adjusted Net Earnings (2) |
$ 897.6 |
$ 952.8 |
(6) % |
||||||
|
Adjusted EPS (2) |
$ 0.75 |
$ 0.79 |
(5) % |
(5) % |
6 % |
||||
|
EBITDA (2) |
$ 905.8 |
$ 1,223.1 |
(26) % |
||||||
|
Adjusted EBITDA (2) |
$ 1,284.6 |
$ 1,360.1 |
(6) % |
(5) % |
4 % |
||||
|
U.S. GAAP Net Cash Provided by Operating Activities (5) |
$ 826.5 |
$ 835.2 |
(1) % |
||||||
|
Capital Expenditures |
77.0 |
95.9 |
(20) % |
||||||
|
Free Cash Flow (2)(5)(6) |
$ 749.5 |
$ 739.3 |
1 % |
||||||
|
___________ |
|
|
(1) |
Represents operational change for net sales, adjusted EBITDA, and adjusted EPS which excludes the impacts of foreign currency translation. See “Certain Key Terms and Presentation Matters” in this release for more information. |
|
(2) |
Non-GAAP financial measures. See “Non-GAAP Financial Measures” for additional information. |
|
(3) |
Represents adjustments for the impact of proportionate results from the divestitures that closed in 2023 and 2024, from the 2023 period on an operational basis. See “Certain Key Terms and Presentation Matters” in this release for more information. |
|
(4) |
Complex Gx, which was previously presented as a separate line item in the prior year period, is now included within Generics. Reclassifications were made to prior periods to conform to the current period presentation. |
|
(5) |
Beginning in 2024, upfront and milestone payments related to externally developed IPR&D projects acquired directly in a transaction other than a business combination, which were previously included in cash flows from operating activities in the condensed consolidated statements of cash flows, are now classified as cash flows from investing activities. Certain reclassifications were made to conform the prior period condensed consolidated financial statements to the current period presentation. The adjustments resulted in an increase to net cash provided by operating activities, free cash flow, and net cash used in investing activities of $1 million for the three months ended September 30, 2023. |
|
(6) |
Excluding the impact of transaction costs primarily related to the divestitures of $116 million, free cash flow for the three months ended September 30, 2024, was $866 million. 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 $787 million. |
|
Nine Months Ended |
|||||||||
|
September 30, |
|||||||||
|
(Unaudited; in millions, except %s and per share amounts) |
2024 |
2023 |
Reported |
Operational |
Divestiture |
||||
|
Total Net Sales |
$ 11,177.4 |
$ 11,562.5 |
(3) % |
(2) % |
2 % |
||||
|
Developed Markets |
6,783.3 |
6,932.7 |
(2) % |
(2) % |
1 % |
||||
|
Emerging Markets |
1,737.7 |
1,932.5 |
(10) % |
(5) % |
6 % |
||||
|
JANZ |
1,011.7 |
1,052.2 |
(4) % |
3 % |
4 % |
||||
|
Greater China |
1,644.7 |
1,645.1 |
— % |
3 % |
3 % |
||||
|
Net Sales by Product Category |
|||||||||
|
Brands |
$ 7,034.4 |
$ 7,398.1 |
(5) % |
(3) % |
1 % |
||||
|
Generics (4) |
4,143.0 |
4,164.4 |
(1) % |
— % |
4 % |
||||
|
U.S. GAAP Gross Profit |
$ 4,408.6 |
$ 4,842.1 |
(9) % |
||||||
|
U.S. GAAP Gross Margin |
39.3 % |
41.8 % |
|||||||
|
Adjusted Gross Profit (2) |
$ 6,551.6 |
$ 6,916.5 |
(5) % |
||||||
|
Adjusted Gross Margin (2) |
58.4 % |
59.7 % |
|||||||
|
U.S. GAAP Net (Loss) Earnings |
$ (117.7) |
$ 820.3 |
NM |
||||||
|
U.S. GAAP (Loss) Earnings Per Share |
$ (0.10) |
$ 0.68 |
NM |
||||||
|
Adjusted Net Earnings (2) |
$ 2,536.8 |
$ 2,791.1 |
(9) % |
||||||
|
Adjusted EPS (2) |
$ 2.11 |
$ 2.32 |
(9) % |
(7) % |
— % |
||||
|
EBITDA (2) |
$ 2,480.1 |
$ 3,586.2 |
(31) % |
||||||
|
Adjusted EBITDA (2) |
$ 3,685.9 |
$ 4,006.7 |
(8) % |
(7) % |
— % |
||||
|
U.S. GAAP Net Cash Provided by Operating Activities (5) |
$ 1,820.2 |
$ 2,331.5 |
(22) % |
||||||
|
Capital Expenditures |
185.6 |
211.5 |
(12) % |
||||||
|
Free Cash Flow (2)(5)(6) |
$ 1,634.6 |
$ 2,120.0 |
(23) % |
||||||
|
___________ |
|
|
(1) |
Represents operational change for net sales, adjusted EBITDA, and adjusted EPS which excludes the impacts of foreign currency translation. See “Certain Key Terms and Presentation Matters” in this release for more information. |
|
(2) |
Non-GAAP financial measures. See “Non-GAAP Financial Measures” for additional information. |
|
(3) |
Represents adjustments for the impact of proportionate results from the divestitures that closed in 2023 and 2024, from the 2023 period on an operational basis. See “Certain Key Terms and Presentation Matters” in this release for more information. |
|
(4) |
Complex Gx, which was previously presented as a separate line item in the prior year period, is now included within Generics. Reclassifications were made to prior periods to conform to the current period presentation. |
|
(5) |
Beginning in 2024, upfront and milestone payments related to externally developed IPR&D projects acquired directly in a transaction other than a business combination, which were previously included in cash flows from operating activities in the condensed consolidated statements of cash flows, are now classified as cash flows from investing activities. Certain reclassifications were made to conform the prior period condensed consolidated financial statements to the current period presentation. The adjustments resulted in an increase to net cash provided by operating activities, free cash flow, and net cash used in investing activities of $11 million for the nine months ended September 30, 2023. |
|
(6) |
Excluding the impact of transaction costs primarily related to the divestitures of $306 million, free cash flow for the nine months ended September 30, 2024, was $1.9 billion. 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 $2.2 billion. |
Financial Highlights
- Third quarter 2024 total net sales were $3.7 billion, up ~3% on a divestiture-adjusted operational basis compared to third-quarter 2023 results, with divestiture-adjusted operational net sales growth across all segments.
- Brands net sales reflect the expansion of the Company’s portfolio in Emerging Markets and JANZ, and strong growth in Europe and Greater China. This was partially offset by unfavorable channel dynamics in North America and the impact of government price regulations in Japan and Australia.
- Generics net sales reflect strong growth from new product performance in Developed Markets, continued growth from complex products, and solid performance across our broader European portfolio.
- The Company generated approximately $133 million in new product revenues in the quarter primarily driven by Breyna™, lisdexamfetamine, and other new products globally. The Company expects to deliver approximately $500 million to $600 million in new product revenues in 2024.
- U.S. GAAP net earnings were $95 million and adjusted EBITDA was $1.3 billion, up ~4% on a divestiture-adjusted operational basis. U.S. GAAP diluted EPS was $0.08 per share and adjusted EPS was $0.75 per share, up ~6% on a divestiture-adjusted operational basis.
- This quarter’s results demonstrate the Company’s financial strength, as the Company generated U.S. GAAP net cash provided by operating activities of $827 million, and free cash flow, excluding the impact of transaction costs primarily related to the divestitures, of $866 million.
Additional Updates
- The Company retired all of its 2025 and more than a quarter of its 2026 debt maturities, totaling approximately $1.9 billion in debt, which includes the make-whole call of its 2025 notes that settled in October.
- In August, the Company presented a late-breaking oral presentation at the Asia-Pacific League of Associations for Rheumatology Annual Congress of one of its Phase 2 studies of cenerimod in Japanese patients. Data showed a clinically meaningful improvement in disease activity consistent with results from other global Phase 2 studies of cenerimod. The study also showed that cenerimod for the treatment of moderate to severe systemic lupus erythematosus can be considered safe and well tolerated.
- In October, the Company announced positive top-line results of its Phase 3 study evaluating the safety and efficacy of EFFEXOR® (venlafaxine) in Japanese adults with generalized anxiety disorder (GAD). Treatment with once-daily EFFEXOR® met primary and all secondary efficacy endpoints, and it was generally well tolerated with a profile consistent with its known safety profile in non-Japanese patients. There are currently no approved treatments available for GAD in Japan. The Company is targeting its submission to the Pharmaceuticals and Medical Devices Agency in 2025.
- In October, the Company announced it entered an exclusive licensing agreement with Lexicon Pharmaceuticals for sotagliflozin in all markets outside of the U.S. and Europe. This licensing agreement leverages Viatris’ expertise in cardiovascular diseases and its Global Healthcare Gateway® — which offers partners ready access to the Company’s unique global infrastructure. Sotagliflozin was approved by the U.S. Food and Drug Administration in May 2023 to reduce the risk of cardiovascular death, hospitalization for heart failure, and urgent heart failure visit in adults with heart failure or type 2 diabetes mellitus, chronic kidney disease, and other cardiovascular risk factors.
- In October, the Company was named to Forbes’ list of World’s Best Employers 2024. This is the fourth year in a row that Viatris has received this recognition. The World’s Best Employers for 2024 were selected through an independent survey encompassing a vast sample of more than 300,000 participants across 50 different countries.
- In October, the Company was named to Forbes’ list of World’s Top Companies for Women 2024. The World’s Top Companies for Women 2024 were chosen among multi-national corporations that were evaluated in multiple globally administered independent surveys of approximately 100,000 women in 37 countries.
- In October, in recognition of ongoing and systematic work to further advance sustainable operations and responsible practices, as well as sustainability disclosures, the Company was upgraded in the annual MSCI ESG Rating and the ISS ESG Corporate Rating. For the latter, the Company further strengthened its Prime rating.
Financial Guidance
The following table summarizes the Company’s 2024 financial guidance as of November 7, 2024. The Company is not providing forward-looking guidance for U.S. GAAP net earnings (loss) or U.S. GAAP diluted earnings (loss) per share (EPS) or a quantitative reconciliation of its 2024 adjusted EBITDA or adjusted EPS guidance to the most directly comparable U.S. GAAP measures, U.S. GAAP net earnings (loss) or U.S. GAAP diluted EPS, respectively, 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. With respect to the Estimated Ranges provided as of August 8, 2024, and November 7, 2024, U.S. GAAP net cash provided by operating activities for 2024 is estimated to be between $2.62 billion and $2.92 billion, with a midpoint of approximately $2.77 billion. With respect to the Estimated Ranges provided as of August 8, 2024, Viatris did not provide forward-looking guidance for U.S. GAAP net earnings or U.S. GAAP diluted EPS or a quantitative reconciliation of its 2024 adjusted EBITDA or adjusted EPS guidance. Please see “Non-GAAP Financial Measures” for additional information. The Company currently expects to be at the midpoint of the November 7, 2024, guidance ranges.
|
(In millions, except Adjusted EPS) |
Estimated Ranges (2) August 8, 2024 |
Midpoint (2) August 8, 2024 |
Acquired |
Estimated Ranges (4) November 7, 2024 |
Midpoint (4) November 7, 2024 |
||||
|
Total Revenues |
$14,600 – $15,100 |
$14,850 |
$14,600 – $15,100 |
$14,850 |
|||||
|
Adjusted EBITDA (1) |
$4,600 – $4,870 |
$4,735 |
($25) |
$4,575 – $4,845 |
$4,710 |
||||
|
Free Cash Flow (1) |
$2,170 – $2,570 |
$2,370 |
$2,170 – $2,570 |
$2,370 |
|||||
|
Adjusted EPS (1) |
$2.58 – $2.73 |
$2.66 |
($0.02) |
$2.56 – $2.71 |
$2.64 |
|
(1) |
Non-GAAP financial measures. See “Non-GAAP Financial Measures” for additional information. |
|
(2) |
2024 Financial Guidance as provided as of August 8, 2024, excluded the impact of any divestiture-related taxes and transaction costs as well as any acquired IPR&D to be incurred in any future period as it could not be reasonably forecasted. |
|
(3) |
Acquired IPR&D impact related to sotagliflozin licensing agreement entered into in October 2024. |
|
(4) |
2024 Financial Guidance as provided as of November 7, 2024, excludes the impact of any divestiture-related taxes and transaction costs. Also excludes any acquired IPR&D for unsigned deals to be incurred in any future period as it cannot be reasonably forecasted. |
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, currently supplying high-quality medicines to approximately 1 billion patients around the world annually and touching all of life’s moments, from birth to the end of life, acute conditions to chronic diseases. 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 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 LinkedIn, Instagram, YouTube and X (formerly Twitter).
