PITTSBURGH, Feb. 28,
2024 /PRNewswire/ --
- Meets 2023 Guidance for Total Revenues, Adjusted EBITDA and
Free Cash Flow[1]
- Reports 2023 Total Revenues of $15.4
Billion, U.S. GAAP Net Earnings of $54.7 Million, Adjusted EBITDA of $5.1 Billion, U.S. GAAP Net Cash Provided by
Operating Activities of $2.8 Billion
and Free Cash Flow of $2.4
Billion
- Reports Third Consecutive Quarter of Operational Revenue
Growth on a Divestiture-Adjusted Basis in 2023 and Expects to see
Continued Growth in 2024[2]
- Immediately Adds Two Phase 3 Assets, Selatogrel and
Cenerimod, Both With Blockbuster Revenue Potential, Through Global
Research and Development Collaboration With Idorsia; Announces
R&D Event to be Held March 27,
2024
- Completes $250 Million in
Share Repurchases to Date in 2024; Board of Directors Increases
Share Repurchase Authorization by Additional $1 Billion, Bringing Total Authorization to
$2 Billion
- Board of Directors Maintains Dividend Policy for 2024 of
48 Cents ($0.48) per Share and Declares First Quarter
Dividend of 12 Cents ($0.12) per Share
Viatris Inc. (NASDAQ: VTRS) today announced its financial
results for the fourth quarter and full year 2023.
Financial Impact of
Transactions and Acquired IPR&D
|
|
($M)
|
|
2023 Guidance
Ranges
(November 7,
2023)
|
–
|
Divestitures and
Acquisitions(1)
|
–
|
Acquired
IPR&D(2)
|
=
|
2023 Adjusted
Guidance Ranges
|
|
2023
Results
|
Total
Revenues
|
|
$15,400 -
$15,600
|
|
($35)
|
|
—
|
|
$15,365 -
$15,565
|
|
$15,427
|
Adjusted
EBITDA
|
|
$5,000 -
$5,400
|
|
($20)
|
|
($105)
|
|
$4,875 -
$5,275
|
|
$5,124
|
Free Cash
Flow
|
|
$2,300 -
$2,700
|
|
($235)
|
|
($100)
|
|
$1,965 -
$2,365
|
|
$2,423
|
As previously
disclosed, guidance ranges as provided on November 7, 2023,
included the full-year expected performance for the planned
divestitures and excluded any potential related costs such as taxes
and transaction costs, any similar costs related to the eye care
acquisitions, as well as any acquired IPR&D. As a result, the
November 7, 2023, guidance ranges did not include the
following:
|
|
|
|
|
|
|
|
|
|
(1)
|
Divestitures and
Acquisitions impact includes $35M Total Revenues, $20M Adjusted
EBITDA, and $15M Free Cash Flow from the divestitures closed in
2023 (for the period of the respective closing dates to December
31, 2023), as well as $219M of related transaction costs and taxes
in Free Cash Flow.
|
|
|
|
|
(2)
|
Acquired IPR&D
impact on Adjusted EBITDA and Free Cash Flow of $105M and $100M,
respectively, was primarily related to upfront licensing
payments.
|
Executive Commentary
Viatris CEO Scott A. Smith said:
"2023 was an outstanding year for Viatris in which we delivered
strong operational results, streamlined the Company and finished
the year with our third consecutive quarter of operational revenue
growth. As we begin 2024, we are already executing on our vision
for our next chapter—balancing the return of capital to
shareholders through share repurchases and dividends, continuing to
fuel our base business and investing in future growth with today's
announcement of what we expect will be a strategically significant
global research and development collaboration with Idorsia. We
remain focused on the many opportunities we see this year and
beyond to continue to deliver on our mission to empower people
worldwide to live healthier at every stage of life."
Viatris President Rajiv Malik
said: "As we close Phase 1 of our strategy, I am incredibly proud
of all that we have accomplished to integrate, simplify and, more
importantly, stabilize the base business. Our strong results in
2023 reflect our consistent operational and scientific execution.
Based on the stability of our core business and our deep pipeline,
we believe the Company is well positioned for continued growth in
2024 and beyond."
Viatris CFO Sanjeev Narula said:
"The Company had another solid year, we met our financial guidance
and continued to generate strong and durable cash flow. Our
substantial cash flow over the last three years has enabled us to
execute on our capital allocation commitments in Phase 1 of debt
paydown, business development and capital return. We believe we are
in a strong financial position with the return to organic revenue
growth serving to further strengthen our foundation and position us
well for 2024 and beyond."
[1] With respect to the 2023 guidance ranges provided on
November 7, 2023, Viatris did not
provide 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 was estimated to be between $2.8
billion and $3.1 billion. As
previously disclosed, such guidance ranges included the full year
expected performance for the planned divestitures and excluded any
potential related costs, such as taxes and transaction costs, as
well as any similar costs related to the eye care acquisitions, and
also excluded any acquired IPR&D. Please see "Non-GAAP
Financial Measures" for additional information.
[2] For the quarter ended December 31,
2023, total net sales declined 1% on a U.S. GAAP basis and
increased 1% on a divestiture-adjusted operational
basis.
2024 Financial Guidance
The Company is providing the following financial guidance
metrics for fiscal year 2024.
The Company is not providing forward-looking guidance for U.S.
GAAP net earnings (loss) or U.S. GAAP earnings 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 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. U.S. GAAP net cash provided by
operating activities for 2024 is estimated to be between
$2.75 billion and $3.05 billion, with a midpoint of approximately
$2.9 billion.
(In billions,
except Adjusted EPS)
|
|
2024 Guidance
Range(2)(3)
|
|
2024
Midpoint
|
Total
Revenues
|
|
$15.25 -
$15.75
|
|
$15.50
|
Adjusted EBITDA
(1)
|
|
$4.8 - $5.1
|
|
$4.95
|
Free Cash Flow
(1)
|
|
$2.3 - $2.7
|
|
$2.5
|
Adjusted EPS
(1)
|
|
$2.70 -
$2.85
|
|
$2.78
|
(1)
|
Non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional
information.
|
(2)
|
Includes the full-year
expected performance for the pending announced divestitures and
excludes any potential related costs, such as taxes and transaction
costs. Also excludes any acquired IPR&D to be incurred in any
future period as it cannot be reasonably forecasted.
|
(3)
|
Estimated 2024 Total
Revenues and Adjusted EBITDA associated with the pending announced
divestitures is ~$1,100M and ~$320M, respectively.
|
Key Exchange Rates
Used for 2024 Guidance
|
|
|
China Renminbi ($ /
CNY)
|
|
7.25
|
Euro ($ /
EUR)
|
|
0.92
|
Indian Rupee ($ /
INR)
|
|
82.00
|
Japanese Yen ($ /
JPY)
|
|
144.30
|
Return of Capital to Shareholders
Viatris announced that on February 26,
2024, its Board of Directors approved a 2024 dividend policy
of 48 cents ($0.48) per share and declared a quarterly
dividend of 12 cents ($0.12) for each issued and outstanding share of
the Company's common stock. The dividend is payable on March 18, 2024, to shareholders of record at the
close of business on March 11,
2024.
In February 2024, the Company
repurchased approximately 19.2 million shares of common stock at a
cost of approximately $250 million,
as part of its previously announced $1.0
billion share repurchase program that Viatris' Board of
Directors authorized.
The Company announced that on February
26, 2024, its Board of Directors authorized a $1.0 billion increase to the Company's previously
announced $1.0 billion share
repurchase program. As a result, the Company's share repurchase
program now authorizes the repurchase of up to $2.0 billion of the Company's shares of common
stock. The Company has repurchased a total of $500 million in shares through February 28, 2024, under the program.
R&D Event
Viatris will hold an R&D Event on March 27, 2024, from 10
a.m. to noon ET, in New York
City.
The event will include presentations from Viatris executives
discussing the collaboration with Idorsia and other elements of the
Company's pipeline, as well as presentations from two expert
thought leaders. The presenters will be available to answer
questions at the end of the presentations.
Expert thought leaders presenting at the event are:
- Dr. Deepak L. Bhatt, MD, MPH, a top expert in
cardiovascular medicine and interventional cardiology, Director of
Mount Sinai Heart. Dr. Bhatt is highly recognized for his
significant breakthroughs in the field of cardiology, including
interventional cardiology, heart disease prevention, vascular
medicine and heart failure.
- Dr. Anca Askanase, MD, founder and clinical director of
Columbia University's new Lupus Center
and the Director of Rheumatology Clinical Trials. Dr. Askanase is
an internationally renowned clinician, diagnostician and researcher
with more than 15 years specializing in complex SLE. Dr. Askanase
trained as a rheumatologist at New York
University where she remained for more than 15 years on
faculty, directing clinical trials, training fellows and residents,
and treating challenging cases of SLE at NYU's prestigious hospitals.
Interested parties will be able to access a live webcast of the
event at investor.viatris.com. An archived version also will be
available following the live event and can be accessed at the same
location for a limited time.
Conference Call and Earnings Materials
Viatris will host a conference call and live webcast, today at
8:30 a.m. ET, to review the Company's
fourth quarter and full-year 2023 financial results, along with
2024 financial guidance. Investors and the general public are
invited to listen to a live webcast of the call at
investor.viatris.com or by calling 844.308.3344 or 412.317.1896 for
international callers. The "Viatris Q4 and Full-Year 2023 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
|
|
December
31,
|
(Unaudited; in
millions, except %s)
|
2023
|
|
2022
|
|
Reported
Change
|
|
Operational
Change(1) (3)
|
|
Divestiture-
Adjusted
Operational
Change(2) (3)
|
Total Net
Sales
|
$ 3,825.9
|
|
$ 3,867.1
|
|
(1) %
|
|
(2) %
|
|
1 %
|
Developed
Markets
|
2,319.2
|
|
2,382.2
|
|
(3) %
|
|
(5) %
|
|
(1) %
|
Emerging
Markets
|
619.1
|
|
580.6
|
|
7 %
|
|
10 %
|
|
14 %
|
JANZ
|
372.3
|
|
398.5
|
|
(7) %
|
|
(2) %
|
|
(1) %
|
Greater
China
|
515.3
|
|
505.8
|
|
2 %
|
|
2 %
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$ 2,402.4
|
|
$ 2,312.1
|
|
4 %
|
|
3 %
|
|
4 %
|
Generics
(4)
|
1,423.5
|
|
1,555.0
|
|
(8) %
|
|
(9) %
|
|
(3) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$ 1,596.5
|
|
$ 1,274.1
|
|
25 %
|
|
|
|
|
U.S. GAAP Gross
Margin
|
41.6 %
|
|
32.9 %
|
|
|
|
|
|
|
Adjusted Gross Profit
(3)
|
$ 2,208.3
|
|
$ 2,207.3
|
|
— %
|
|
|
|
|
Adjusted Gross Margin
(3)
|
57.5 %
|
|
56.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net (Loss)
Earnings
|
$
(765.6)
|
|
$ 1,011.2
|
|
nm
|
|
|
|
|
Adjusted Net Earnings
(3)
|
$
746.6
|
|
$
823.0
|
|
(9) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(3)
|
$ (69.7)
|
|
$ 2,485.8
|
|
nm
|
|
|
|
|
Adjusted EBITDA
(3)
|
$ 1,117.4
|
|
$ 1,210.6
|
|
(8) %
|
|
(8) %
|
|
(5) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$
479.4
|
|
$
142.6
|
|
236 %
|
|
|
|
|
Capital
expenditures
|
165.5
|
|
$
153.7
|
|
8 %
|
|
|
|
|
Free cash flow
(3)(5)
|
$
313.9
|
|
$ (11.1)
|
|
nm
|
|
|
|
|
___________
|
(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 the impact of the results from the divested biosimilars
business and proportionate results from the divestitures that
closed in 2023 from the 2022 period 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)
|
As a result of the
contribution of the biosimilars business to Biocon Biologics
Limited ("Biocon Biologics") in November 2022, Complex Gx and
Biosimilars, which were previously presented as a separate line
item, are now included within Generics. Reclassifications
were made to prior periods to conform to the current period
presentation.
|
(5)
|
Excluding the impact of
transaction costs primarily related to the divestitures and the eye
care acquisitions of $140 million, free cash flow for the three
months ended December 31, 2023, was $454 million.
|
|
Year
Ended
|
|
December
31,
|
(Unaudited; in
millions, except %s)
|
2023
|
|
2022
|
|
Reported
Change
|
|
Operational
Change(1) (3)
|
|
Divestiture-
Adjusted
Operational
Change(2) (3)
|
Total Net
Sales
|
$
15,388.4
|
|
$
16,218.1
|
|
(5) %
|
|
(4) %
|
|
— %
|
Developed
Markets
|
9,251.9
|
|
9,768.9
|
|
(5) %
|
|
(6) %
|
|
(1) %
|
Emerging
Markets
|
2,551.6
|
|
2,615.6
|
|
(2) %
|
|
4 %
|
|
7 %
|
JANZ
|
1,424.5
|
|
1,632.4
|
|
(13) %
|
|
(7) %
|
|
(6) %
|
Greater
China
|
2,160.4
|
|
2,201.2
|
|
(2) %
|
|
2 %
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Product
Category
|
|
|
|
|
|
|
|
|
|
Brands
|
$
9,800.5
|
|
$
9,889.6
|
|
(1) %
|
|
1 %
|
|
1 %
|
Generics
(4)
|
5,587.9
|
|
6,328.5
|
|
(12) %
|
|
(10) %
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Gross
Profit
|
$
6,438.6
|
|
$
6,497.0
|
|
(1) %
|
|
|
|
|
U.S. GAAP Gross
Margin
|
41.7 %
|
|
40.0 %
|
|
|
|
|
|
|
Adjusted Gross Profit
(3)
|
$
9,124.8
|
|
$
9,581.7
|
|
(5) %
|
|
|
|
|
Adjusted Gross Margin
(3)
|
59.1 %
|
|
58.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Net
Earnings
|
$
54.7
|
|
$
2,078.6
|
|
nm
|
|
|
|
|
Adjusted Net Earnings
(3)
|
$
3,537.7
|
|
$
4,077.1
|
|
(13) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(3)
|
$
3,516.5
|
|
$
6,433.2
|
|
(45) %
|
|
|
|
|
Adjusted EBITDA
(3)
|
$
5,124.1
|
|
$
5,776.8
|
|
(11) %
|
|
(9) %
|
|
(7) %
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP net cash
provided by operating activities
|
$
2,799.6
|
|
$
2,952.6
|
|
(5) %
|
|
|
|
|
Capital
expenditures
|
377.0
|
|
406.0
|
|
(7) %
|
|
|
|
|
Free cash flow
(3)(5)
|
$
2,422.6
|
|
$
2,546.6
|
|
(5) %
|
|
|
|
|
___________
|
|
|
(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 the impact of the results from the divested biosimilars
business and proportionate results from the divestitures that
closed in 2023 from the 2022 period 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)
|
As a result of the
contribution of the biosimilars business to Biocon Biologics in
November 2022, Complex Gx and Biosimilars, which were
previously presented as a separate line item, are now included
within Generics. Reclassifications were made to prior
periods to conform to the current period presentation.
|
(5)
|
Excluding the impact of
transaction costs primarily related to the divestitures and the eye
care acquisitions of $219 million, free cash flow for the year
ended December 31, 2023, was $2.64 billion.
|
Financial Highlights
- Fourth quarter 2023 total net sales totaled $3.83 billion, up 1% on a divestiture-adjusted
operational basis (as defined in "Certain Key Terms and
Presentation Matters" below) compared to fourth-quarter 2022
results.
- Brands performed in line with expectations, with overall solid
year-over-year performance in key brands including Lipitor®,
Yupelri® and Dona®.
- Generics, which include diversified product forms such as oral
solids, injectables, transdermals, topicals, and complex
generics, performed ahead of expectations due to solid performance
across the broader portfolio in Developed and Emerging Markets.
- The Company generated approximately $107
million in new product revenues (as defined in "Certain Key
Terms and Presentation Matters" below) in the fourth quarter
(approximately $450 million for the
year) primarily driven by Breyna™ in the U.S.
- The Company had U.S. GAAP net cash provided by operating
activities of $479 million in the
fourth quarter ($2.80 billion for the
year) and generated free cash flow of $314
million in the fourth quarter ($2.42
billion for the year), in each case primarily driven by
strong operating results. U.S. GAAP net cash provided by operating
activities and free cash flow included approximately $140 million for the fourth quarter ($219 million for the year) of transaction costs
primarily related to the eye care acquisitions and the
divestitures.
- The Company paid down approximately $500
million in debt in the fourth quarter (approximately
$1.25 billion for the year). 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 12 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 results
from the divested Biosimilars business and proportionate results
from the divestitures that closed in 2023 from the 2022 period by
excluding net sales from those divested businesses from comparable
prior periods, and a reclassification to conform prior year-to-date
amounts to current year presentation of divestiture-adjusted
operational net sales. Also, for adjusted EBITDA refers to
operational changes, adjusted as outlined in the previous sentence
and further adjusted for the mark up for the TSA services provided
to Biocon Biologics.
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.
Closed divestitures or divestitures closed in 2023: Refers
to the divestiture of the Company's rights to two women's
healthcare products in certain countries (other than the U.K.,
which remains subject to regulatory approval) that closed in
December 2023 and the divestitures of
the commercialization rights in certain of the Upjohn Distributor
markets that closed in 2023.
Remaining divestitures or pending announced divestitures:
Refers to the remaining announced divestitures that have not been
consummated to date, including the divestiture of substantially all
of our over-the-counter ("OTC") business, women's healthcare
business primarily related to oral and injectable contraceptives,
active pharmaceutical ingredient ("API") business in India, and the remaining commercialization
rights in the Upjohn Distributor Markets.
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 divestitures, operational change, divestiture-adjusted
operational change and adjusted EPS, are presented in order to
supplement investors' and other readers' understanding and
assessment of the financial performance of Viatris Inc. ("Viatris"
or the "Company"). Free cash flow refers to U.S. GAAP net cash
provided by operating activities less capital expenditures.
Adjusted EPS will be calculated as adjusted net earnings divided by
the weighted average number of diluted shares of common stock
outstanding. 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 divestitures that have
closed during 2022 and 2023 (including the divestiture of the
Biosimilars business in November 2022
and the divestitures closed in 2023) by excluding net sales from
those divested businesses from comparable prior 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 three and twelve months ended December 31,
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' Annual Report on
Form 10-K for the year ended December 31,
2023.
With respect to the guidance ranges as provided on November 7, 2023, at that time the Company did
not provide forward-looking guidance for U.S. GAAP net earnings
(loss) or a quantitative reconciliation of its 2023 adjusted EBITDA
guidance to the most directly comparable U.S. GAAP measure, U.S.
GAAP net earnings (loss), because it was 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 for non-marketable equity
investments, as well as related income tax accounting, because
certain of these items had not occurred, were out of the Company's
control and/or could be reasonably predicted without unreasonable
effort. These items were uncertain, depended on various factors,
and could have had a material impact on U.S. GAAP reported results
for the guidance period. As previously disclosed, such guidance
ranges included the full year expected performance for the planned
divestitures and excluded any potential related costs, such as
taxes and transaction costs, as well as any similar costs related
to the eye care acquisitions, and also excluded any acquired
IPR&D.
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).
Forward-Looking Statements
This release contains "forward-looking statements". These
statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may include, without limitation,
statements about our 2024 financial guidance; key exchange rates
used for 2024 guidance; expecting to see continue growth in 2024;
immediately adding to phase 3 assets, selatogrel and cenerimod,
both with blockbuster revenue potential, through global research
and development collaboration with Idorsia; announced R&D event
to be held on March 27, 2024; Board
of directors increases share repurchase authorization by additional
$1 billion, bringing total
authorization to $2 billion; as we
begin 2024, we are already executing on our vision for our next
chapter—balancing the return of capital to shareholders through
share repurchases and dividends, continuing to fuel our base
business and investing in future growth with today's announcement
of what we expect will be a strategically significant global
research and development collaboration with Idorsia; we remain
focused on the many opportunities we see this year and beyond to
continue to deliver on our mission to empower people worldwide to
live healthier at every stage of life; as we close Phase 1 of our
strategy, I am incredibly proud of all that we have accomplished to
integrate, simplify and, more importantly, stabilize the base
business; our strong results in 2023 reflect our consistent
operational and scientific execution; based on the stability of our
core business and our deep pipeline, we believe the Company is well
positioned for continued growth in 2024 and beyond; our substantial
cash flow over the last three years has enabled us to execute on
our capital allocation commitments in Phase 1 of debt paydown,
business development and capital return we believe we are in a
strong financial position with the return to organic revenue growth
serving to further strengthen our foundation and position us well
for 2024 and beyond; Viatris announced that on February 26, 2024, its Board of Directors
approved a 2024 dividend policy of 48
cents ($0.48) per share and
declared a quarterly dividend of 12
cents ($0.12) for each issued
and outstanding share of the Company's common stock, payable on
March 18, 2024, to shareholders of
record at the close of business on March 11,
2024; the Company remains fully committed to maintaining its
investment grade credit rating; the goals or outlooks with respect
to the Company's strategic initiatives, including but not limited
to the Company's two-phased strategic vision and potential and
announced divestitures, acquisitions or other transactions; the
benefits and synergies of such divestitures, acquisitions, or other
transactions, or restructuring programs; 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 not realize the intended benefits of, or achieve
the intended goals or outlooks with respect to, its strategic
initiatives (including divestitures, acquisitions, or other
potential transactions) or move up the value chain by focusing on
more complex and innovative products to build a more durable higher
margin portfolio; the possibility that the Company may be unable to
achieve intended or expected benefits, goals, outlooks, synergies,
growth opportunities and operating efficiencies in connection with
divestitures, acquisitions, other transactions, or restructuring
programs, within the expected timeframes or at all; with respect to
previously announced divestitures that have not been consummated,
including the divestiture of substantially all of our OTC Business,
such divestitures not being completed on the expected timelines or
at all and the risk that the conditions set forth in the definitive
agreements with respect to such divestitures will not be satisfied
or waived; with respect to previously announced divestitures,
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; goodwill or impairment charges or
other losses related to the divestiture or sale of businesses or
assets (including but not limited to announced divestitures that
have not yet been consummated); 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; 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, motivate 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 IT 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 Part I, Item 1A of the Company's Annual Report on
Form 10-K for the year ended December 31,
2023, which is expected to be filed with the SEC on
February 28, 2024 and our other
filings with the SEC. You can access Viatris' filings with the SEC
through the SEC website at www.sec.gov or through our website and
Viatris strongly encourages you to do so. Viatris routinely posts
information that may be important to investors on our website at
investor.viatris.com, and we use this website address as a means of
disclosing material information to the public in a broad,
non-exclusionary manner for purposes of the SEC's Regulation Fair
Disclosure (Reg FD). The contents of our website are not
incorporated into this release or our filings with the SEC. Viatris
undertakes no obligation to update any statements herein for
revisions or changes after the date of this release other than as
required by law.
Viatris Inc. and
Subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In millions,
except per share amounts)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$ 3,825.9
|
|
$ 3,867.1
|
|
$
15,388.4
|
|
$
16,218.1
|
Other
revenues
|
11.4
|
|
8.9
|
|
38.5
|
|
44.6
|
Total
revenues
|
3,837.3
|
|
3,876.0
|
|
15,426.9
|
|
16,262.7
|
Cost of
sales
|
2,240.8
|
|
2,601.9
|
|
8,988.3
|
|
9,765.7
|
Gross profit
|
1,596.5
|
|
1,274.1
|
|
6,438.6
|
|
6,497.0
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
202.8
|
|
182.4
|
|
805.2
|
|
662.2
|
Acquired
IPR&D
|
94.3
|
|
36.4
|
|
105.5
|
|
36.4
|
Selling, general and
administrative
|
1,605.8
|
|
1,265.4
|
|
4,650.1
|
|
4,179.1
|
Litigation settlements
and other contingencies, net
|
148.1
|
|
(8.8)
|
|
111.6
|
|
4.4
|
Total operating
expenses
|
2,051.0
|
|
1,475.4
|
|
5,672.4
|
|
4,882.1
|
(Loss) earnings from
operations
|
(454.5)
|
|
(201.3)
|
|
766.2
|
|
1,614.9
|
Interest
expense
|
140.9
|
|
147.1
|
|
573.1
|
|
592.4
|
Other expense (income),
net
|
259.6
|
|
(1,817.3)
|
|
(9.8)
|
|
(1,790.7)
|
(Loss) earnings before
income taxes
|
(855.0)
|
|
1,468.9
|
|
202.9
|
|
2,813.2
|
Income tax (benefit)
provision
|
(89.4)
|
|
457.7
|
|
148.2
|
|
734.6
|
Net (loss)
earnings
|
(765.6)
|
|
1,011.2
|
|
54.7
|
|
2,078.6
|
(Loss) earnings per
share attributable to Viatris Inc. shareholders
|
|
|
|
|
|
|
|
Basic
|
$
(0.64)
|
|
$
0.83
|
|
$
0.05
|
|
$
1.71
|
Diluted
|
$
(0.64)
|
|
$
0.83
|
|
$
0.05
|
|
$
1.71
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,200.1
|
|
1,213.1
|
|
1,200.3
|
|
1,212.1
|
Diluted
|
1,200.1
|
|
1,221.4
|
|
1,206.9
|
|
1,217.4
|
Viatris Inc. and
Subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
(In
millions)
|
December 31,
2023
|
|
December 31,
2022
|
ASSETS
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
991.9
|
|
$
1,259.9
|
Accounts receivable,
net
|
3,700.4
|
|
3,814.5
|
Inventories
|
3,469.7
|
|
3,519.5
|
Prepaid expenses and
other current assets
|
2,028.1
|
|
1,811.2
|
Assets held for
sale
|
2,786.0
|
|
230.3
|
Total current
assets
|
12,976.1
|
|
10,635.4
|
Intangible assets,
net
|
19,181.1
|
|
22,607.1
|
Goodwill
|
9,867.1
|
|
10,425.8
|
Other non-current
assets
|
5,661.2
|
|
6,353.9
|
Total assets
|
$
47,685.5
|
|
$
50,022.2
|
LIABILITIES AND
EQUITY
|
Liabilities
|
|
|
|
Current portion of
long-term debt and other long-term obligations
|
$
1,943.4
|
|
$
1,259.1
|
Liabilities held for
sale
|
275.1
|
|
—
|
Other current
liabilities
|
5,558.9
|
|
5,487.1
|
Long-term
debt
|
16,188.1
|
|
18,015.2
|
Other non-current
liabilities
|
3,252.6
|
|
4,188.5
|
Total
liabilities
|
27,218.1
|
|
28,949.9
|
Shareholders'
equity
|
20,467.4
|
|
21,072.3
|
Total liabilities and
equity
|
$
47,685.5
|
|
$
50,022.2
|
Viatris Inc. and
Subsidiaries
|
Key Product Net
Sales, on a Consolidated Basis
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Select Key Global
Products
|
|
|
|
|
|
|
|
|
Lipitor ®
|
|
$
379.8
|
|
$
369.1
|
|
$
1,559.3
|
|
$
1,635.2
|
Norvasc ®
|
|
171.8
|
|
175.0
|
|
732.4
|
|
775.1
|
Lyrica ®
|
|
133.4
|
|
139.9
|
|
556.5
|
|
623.8
|
Viagra ®
|
|
92.3
|
|
97.0
|
|
428.8
|
|
458.9
|
EpiPen®
Auto-Injectors
|
|
87.0
|
|
68.3
|
|
442.2
|
|
378.0
|
Creon ®
|
|
80.6
|
|
77.5
|
|
304.9
|
|
304.0
|
Celebrex ®
|
|
75.1
|
|
84.7
|
|
330.6
|
|
338.1
|
Effexor ®
|
|
68.0
|
|
64.2
|
|
262.9
|
|
279.6
|
Zoloft ®
|
|
62.0
|
|
57.5
|
|
235.7
|
|
246.2
|
Xalabrands
|
|
48.2
|
|
48.4
|
|
193.2
|
|
195.1
|
|
|
|
|
|
|
|
|
|
Select Key Segment
Products
|
|
|
|
|
|
|
|
|
Yupelri ®
|
|
$
60.5
|
|
$
56.0
|
|
$
220.8
|
|
$
202.1
|
Influvac ®
|
|
54.9
|
|
47.2
|
|
192.4
|
|
225.5
|
Dymista ®
|
|
45.0
|
|
41.8
|
|
200.0
|
|
179.8
|
Amitiza ®
|
|
41.2
|
|
42.6
|
|
157.0
|
|
167.9
|
Xanax ®
|
|
35.1
|
|
41.0
|
|
154.8
|
|
156.5
|
____________
|
(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
months and year ended December 31, 2023 include the impact of
foreign currency translations compared to the prior year
period.
|
Viatris Inc. and
Subsidiaries
Reconciliation of
Non-GAAP Financial Measures
(Unaudited)
|
|
Reconciliation of
U.S. GAAP Net (Loss) Earnings to Adjusted Net
Earnings
|
Below is a
reconciliation of U.S. GAAP net (loss) earnings to adjusted net
earnings for the three months and year ended
December 31, 2023, compared to the prior year
periods:
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
(In
millions)
|
2023
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP net (loss)
earnings
|
$
(765.6)
|
|
$ 1,011.2
|
|
$
54.7
|
|
$ 2,078.6
|
Purchase accounting
related amortization (primarily included in cost of sales)
(a)
|
556.9
|
|
790.8
|
|
2,421.5
|
|
2,721.3
|
Impairment of goodwill
related to assets held for sale (included in SG&A)
(b)
|
580.1
|
|
117.0
|
|
580.1
|
|
117.0
|
Litigation settlements
and other contingencies, net
|
148.1
|
|
(8.8)
|
|
111.6
|
|
4.4
|
Interest expense
(primarily amortization of premiums and discounts on long term
debt)
|
(10.9)
|
|
(11.9)
|
|
(42.4)
|
|
(48.7)
|
Acquisition and
divestiture-related costs (primarily included in SG&A)
(c)
|
147.8
|
|
169.4
|
|
377.9
|
|
475.7
|
Loss (gain) on
divestitures of businesses (included in other expense (income),
net) (d)
|
239.9
|
|
(1,754.1)
|
|
239.9
|
|
(1,754.1)
|
Restructuring-related
costs (e)
|
26.5
|
|
44.9
|
|
125.2
|
|
86.9
|
Share-based
compensation expense
|
55.8
|
|
29.7
|
|
180.7
|
|
116.5
|
Other special items
included in:
|
|
|
|
|
|
|
|
Cost of sales
(f)
|
27.3
|
|
104.8
|
|
119.2
|
|
255.2
|
Research and
development expense
|
0.1
|
|
0.1
|
|
2.8
|
|
1.0
|
Selling, general and
administrative expense (g)
|
(117.5)
|
|
24.5
|
|
(83.5)
|
|
68.8
|
Other expense
(income), net (h)
|
89.6
|
|
4.4
|
|
(24.4)
|
|
(3.8)
|
Tax effect of the above
items and other income tax related items (i)
|
(231.5)
|
|
301.0
|
|
(525.6)
|
|
(41.7)
|
Adjusted net
earnings
|
$
746.6
|
|
$
823.0
|
|
$ 3,537.7
|
|
$ 4,077.1
|
____________
|
Significant items for
the three months and year ended December 31, 2023, include the
following:
|
(a)
|
For the year ended
December 31, 2023, includes an intangible asset charge related to
the divestitures of the commercialization rights in the Upjohn
Distributor Markets of approximately $32.0 million to write
down the disposal group to fair value, less cost to sell. For the
three months and year ended December 31, 2023, 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 $29.3 million, respectively.
|
(b)
|
For the three
months and year ended December 31, 2023, consists of a
goodwill impairment charge of approximately $580.1 million
related to the planned divestiture of the OTC Business.
|
(c)
|
Acquisition and
divestiture-related costs consist primarily of transaction costs
including legal and consulting fees and integration
activities.
|
(d)
|
For the three
months and year ended December 31, 2023, includes a charge
related to the planned divestiture of the OTC Business of
approximately $154.7 million to write down the disposal group
to fair value, less cost to sell, and a charge of approximately
$85.2 million related to the divestitures of the
commercialization rights in the Upjohn Distributor
Markets.
|
(e)
|
For the three months
ended December 31, 2023, charges include approximately $12.9
million in cost of sales, approximately $0.3 million in R&D,
and approximately $13.3 million in SG&A. For the year ended
December 31, 2023, charges include approximately $101.8 million in
cost of sales, approximately $0.3 million in R&D, and
approximately $23.1 million in SG&A.
|
(f)
|
For the three months
and year ended December 31, 2023, charges include
incremental manufacturing variances at plants in the 2020
restructuring program of approximately $9.3 million and
$45.9 million, respectively. For the year ended
December 31, 2023, also includes charges related to the
divestitures of the commercialization rights in the Upjohn
Distributor Markets of approximately $19.2 million.
|
(g)
|
For the three months
and year ended December 31, 2023, includes a gain of approximately
$156.2 million on the transaction to divest the Company's
rights to two women's healthcare products in certain countries
(other than in the U.K., which remains subject to regulatory
approval), which closed in December 2023.
|
(h)
|
For the three months
December 31, 2023, includes a loss of approximately
$71.7 million as a result of remeasuring the compulsory
convertible preferred shares ("CCPS") in Biocon Biologics to fair
value. For the year ended December 31, 2023, includes net
gains of approximately $43.4 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.
|
(i)
|
Adjusted for changes
for uncertain tax positions.
|
Reconciliation of
U.S. GAAP Net (Loss) Earnings to EBITDA and Adjusted
EBITDA
|
|
Below is a
reconciliation of U.S. GAAP net (loss) earnings to EBITDA and
adjusted EBITDA for the three months and year ended
December 31, 2023, compared to the prior year
period:
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP net (loss)
earnings
|
$
(765.6)
|
|
$ 1,011.2
|
|
$
54.7
|
|
$ 2,078.6
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Income tax (benefit)
provision
|
(89.4)
|
|
457.7
|
|
148.2
|
|
734.6
|
Interest expense
(a)
|
140.9
|
|
147.1
|
|
573.1
|
|
592.4
|
Depreciation and
amortization (b)
|
644.4
|
|
869.8
|
|
2,740.5
|
|
3,027.6
|
EBITDA
|
$
(69.7)
|
|
$ 2,485.8
|
|
$ 3,516.5
|
|
$ 6,433.2
|
Add / (deduct)
adjustments:
|
|
|
|
|
|
|
|
Share-based
compensation expense
|
55.8
|
|
29.6
|
|
180.7
|
|
116.4
|
Litigation settlements
and other contingencies, net
|
148.1
|
|
(8.8)
|
|
111.6
|
|
4.4
|
Loss (gain) on
divestitures of businesses
|
239.9
|
|
(1,754.1)
|
|
239.9
|
|
(1,754.1)
|
Impairment of goodwill
related to assets held for sale
|
580.1
|
|
117.0
|
|
580.1
|
|
117.0
|
Restructuring,
acquisition and divestiture related and other special items
(c)
|
163.2
|
|
341.1
|
|
495.3
|
|
859.9
|
Adjusted
EBITDA
|
$ 1,117.4
|
|
$ 1,210.6
|
|
$ 5,124.1
|
|
$ 5,776.8
|
____________
|
(a)
|
Includes amortization
of premiums and discounts on long-term debt.
|
(b)
|
Includes purchase
accounting related amortization.
|
(c)
|
See items detailed in
the Reconciliation of U.S. GAAP Net (Loss) Earnings to Adjusted Net
Earnings.
|
Summary of Total
Revenues by Segment
|
|
|
Three Months
Ended
|
|
December
31,
|
(In millions,
except
%s)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
Currency
Impact (1)
|
|
2023
Constant
Currency
Revenues
|
|
Constant
Currency
%
Change (2)
|
|
2022
Divestitures
(3)
|
|
2022
Adjusted Ex
Divestitures
(5)
|
|
Divestiture-
Adjusted
Operational
Change (6)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
$ 2,319.2
|
|
$ 2,382.2
|
|
(3) %
|
|
$ (61.6)
|
|
$
2,257.6
|
|
(5) %
|
|
$
90.2
|
|
2,292.0
|
|
(1) %
|
Greater
China
|
515.3
|
|
505.8
|
|
2 %
|
|
2.1
|
|
517.4
|
|
2 %
|
|
0.1
|
|
505.7
|
|
2 %
|
JANZ
|
372.3
|
|
398.5
|
|
(7) %
|
|
18.5
|
|
390.8
|
|
(2) %
|
|
4.0
|
|
394.5
|
|
(1) %
|
Emerging
Markets
|
619.1
|
|
580.6
|
|
7 %
|
|
17.7
|
|
636.8
|
|
10 %
|
|
21.6
|
|
559.0
|
|
14 %
|
Total net
sales
|
3,825.9
|
|
3,867.1
|
|
(1) %
|
|
(23.3)
|
|
3,802.6
|
|
(2) %
|
|
115.9
|
|
3,751.2
|
|
1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(7)
|
11.4
|
|
8.9
|
|
NM
|
|
(0.2)
|
|
11.2
|
|
NM
|
|
|
|
|
|
|
Consolidated total
revenues (8)
|
$ 3,837.3
|
|
$ 3,876.0
|
|
(1) %
|
|
$ (23.5)
|
|
$
3,813.8
|
|
(2) %
|
|
|
|
|
|
|
|
Year
Ended
|
|
December
31,
|
(In millions,
except
%s)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
Currency
Impact
(1)
|
|
2023
Constant
Currency
Revenues
|
|
Constant
Currency
%
Change (2)
|
|
2022
Divestitures
(3)
|
|
Other
(4)
|
|
2022
Adjusted
Ex
Divestitures
and
Other (5)
|
|
Divestiture-
Adjusted
Operational
Change (6)
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed
Markets
|
$ 9,251.9
|
|
$ 9,768.9
|
|
(5) %
|
|
$ (85.2)
|
|
$
9,166.6
|
|
(6) %
|
|
$
539.6
|
|
$ 13.9
|
|
$ 9,215.4
|
|
(1) %
|
Greater
China
|
2,160.4
|
|
2,201.2
|
|
(2) %
|
|
87.1
|
|
2,247.6
|
|
2 %
|
|
0.7
|
|
(4.2)
|
|
2,204.7
|
|
2 %
|
JANZ
|
1,424.5
|
|
1,632.4
|
|
(13) %
|
|
96.2
|
|
1,520.6
|
|
(7) %
|
|
18.8
|
|
(9.7)
|
|
1,623.3
|
|
(6) %
|
Emerging
Markets
|
2,551.6
|
|
2,615.6
|
|
(2) %
|
|
160.8
|
|
2,712.4
|
|
4 %
|
|
70.4
|
|
—
|
|
2,545.2
|
|
7 %
|
Total net
sales
|
15,388.4
|
|
16,218.1
|
|
(5) %
|
|
258.9
|
|
15,647.2
|
|
(4) %
|
|
629.5
|
|
—
|
|
15,588.6
|
|
— %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues
(7)
|
38.5
|
|
44.6
|
|
NM
|
|
(0.1)
|
|
38.4
|
|
NM
|
|
|
|
|
|
|
|
|
Consolidated total
revenues (8)
|
$
15,426.9
|
|
$
16,262.7
|
|
(5) %
|
|
$
258.8
|
|
$
15,685.6
|
|
(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 net sales
relating to divestitures that have closed during 2022 and 2023 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 net sales relating to divestitures that have closed
during 2022 and 2023 for the relevant period and a reclassification
in 2023.
|
(6)
|
See "Certain Key Terms
and Presentation Matters" in this release for more
information.
|
(7)
|
For the three months
ended December 31, 2023, other revenues in Developed Markets,
JANZ, and Emerging Markets were approximately $6.6 million, $0.3
million, and $4.5 million, respectively. For the year ended
December 31, 2023, other revenues in Developed Markets, JANZ, and
Emerging Markets were approximately $26.1 million, $1.1 million,
and $11.3 million, respectively.
|
(8)
|
Amounts exclude
intersegment revenue which eliminates on a consolidated
basis.
|
Reconciliation of
Statements of Operations Line Items
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP cost of
sales
|
$ 2,240.8
|
|
$ 2,601.9
|
|
$ 8,988.3
|
|
$ 9,765.7
|
Deduct:
|
|
|
|
|
|
|
|
Purchase accounting
amortization and other related items
|
(556.9)
|
|
(790.8)
|
|
(2,421.6)
|
|
(2,721.2)
|
Acquisition and
divestiture-related costs
|
(14.0)
|
|
(8.9)
|
|
(40.7)
|
|
(50.0)
|
Restructuring-related
costs
|
(12.9)
|
|
(28.4)
|
|
(101.8)
|
|
(56.8)
|
Share-based
compensation expense
|
(0.7)
|
|
(0.3)
|
|
(2.9)
|
|
(1.5)
|
Other special
items
|
(27.3)
|
|
(104.8)
|
|
(119.2)
|
|
(255.2)
|
Adjusted cost of
sales
|
$ 1,629.0
|
|
$ 1,668.7
|
|
$ 6,302.1
|
|
$ 6,681.0
|
|
|
|
|
|
|
|
|
Adjusted gross profit
(a)
|
$ 2,208.3
|
|
$ 2,207.3
|
|
$ 9,124.8
|
|
$ 9,581.7
|
|
|
|
|
|
|
|
|
Adjusted gross margin
(a)
|
58 %
|
|
57 %
|
|
59 %
|
|
59 %
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP
R&D
|
$
202.8
|
|
$
182.4
|
|
$
805.2
|
|
$
662.2
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition and
divestiture-related costs
|
(2.7)
|
|
(5.6)
|
|
(11.9)
|
|
(11.9)
|
Restructuring and
related costs
|
(0.3)
|
|
(1.4)
|
|
(0.3)
|
|
(1.4)
|
Share-based
compensation expense
|
(1.4)
|
|
(1.5)
|
|
(5.4)
|
|
(5.6)
|
SG&A and R&D
TSA reimbursement (b)
|
(5.3)
|
|
(4.3)
|
|
(32.3)
|
|
(4.3)
|
Other special
items
|
(0.1)
|
|
(0.1)
|
|
(2.8)
|
|
(1.0)
|
Adjusted
R&D
|
$
193.0
|
|
$
169.5
|
|
$
752.5
|
|
$
638.0
|
|
|
|
|
|
|
|
|
Adjusted R&D as %
of total revenues
|
5 %
|
|
4 %
|
|
5 %
|
|
4 %
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP
SG&A
|
$ 1,605.8
|
|
$ 1,265.4
|
|
$ 4,650.1
|
|
$ 4,179.1
|
Deduct:
|
|
|
|
|
|
|
|
Acquisition and
divestiture-related costs
|
(131.1)
|
|
(154.5)
|
|
(325.2)
|
|
(413.4)
|
Restructuring and
related costs
|
(13.3)
|
|
(15.1)
|
|
(23.1)
|
|
(28.7)
|
Purchase accounting
amortization and other related items
|
—
|
|
—
|
|
—
|
|
(0.1)
|
Share-based
compensation expense
|
(53.8)
|
|
(27.9)
|
|
(172.5)
|
|
(109.4)
|
Impairment of goodwill
related to held for sale assets
|
(580.1)
|
|
(117.0)
|
|
(580.1)
|
|
(117.0)
|
SG&A and R&D
TSA reimbursement (b)
|
(10.6)
|
|
(9.7)
|
|
(90.4)
|
|
(9.7)
|
Other special items
and reclassifications
|
117.5
|
|
(24.5)
|
|
83.5
|
|
(68.8)
|
Adjusted
SG&A
|
$
934.4
|
|
$
916.7
|
|
$ 3,542.3
|
|
$ 3,432.0
|
|
|
|
|
|
|
|
|
Adjusted SG&A as %
of total revenues
|
24 %
|
|
24 %
|
|
23 %
|
|
21 %
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP total
operating expenses
|
$ 2,051.0
|
|
$ 1,475.4
|
|
$ 5,672.4
|
|
$ 4,882.1
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Litigation settlements
and other contingencies, net
|
(148.1)
|
|
8.8
|
|
(111.6)
|
|
(4.4)
|
R&D
adjustments
|
(9.8)
|
|
(12.9)
|
|
(52.7)
|
|
(24.2)
|
SG&A
adjustments
|
(671.4)
|
|
(348.7)
|
|
(1,107.8)
|
|
(747.1)
|
Adjusted total
operating expenses
|
$ 1,221.7
|
|
$ 1,122.6
|
|
$ 4,400.3
|
|
$ 4,106.4
|
|
|
|
|
|
|
|
|
Adjusted earnings from
operations (c)
|
$
986.6
|
|
$ 1,084.7
|
|
$ 4,724.5
|
|
$ 5,475.3
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP interest
expense
|
$
140.9
|
|
$
147.1
|
|
$
573.1
|
|
$
592.4
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
Accretion of
contingent consideration liability
|
(1.8)
|
|
(1.7)
|
|
(8.1)
|
|
(7.3)
|
Amortization of
premiums and discounts on long-term debt
|
13.6
|
|
14.7
|
|
54.4
|
|
60.4
|
Other special
items
|
(0.9)
|
|
(1.1)
|
|
(3.9)
|
|
(4.4)
|
Adjusted interest
expense
|
$
151.8
|
|
$
159.0
|
|
$
615.5
|
|
$
641.1
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP other
expense (income), net
|
$
259.6
|
|
$
(1,817.3)
|
|
$
(9.8)
|
|
$
(1,790.7)
|
Add /
(Deduct):
|
|
|
|
|
|
|
|
(Loss) gain on
divestitures of businesses (included in other expense
(income), net)
|
(239.9)
|
|
1,754.1
|
|
(239.9)
|
|
1,754.1
|
Acquisition and
divestiture-related costs
|
—
|
|
(0.4)
|
|
—
|
|
(0.4)
|
Fair value adjustments
on non-marketable equity investments
|
(71.7)
|
|
—
|
|
43.4
|
|
—
|
SG&A and R&D
TSA reimbursement (b)
|
15.9
|
|
14.0
|
|
122.7
|
|
14.0
|
Other items
|
(17.9)
|
|
(4.4)
|
|
(19.0)
|
|
3.8
|
Adjusted other income,
net
|
$
(54.0)
|
|
$
(54.0)
|
|
$ (102.6)
|
|
$
(19.2)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
(In millions,
except %s)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
U.S. GAAP (loss)
earnings before income taxes
|
$
(855.0)
|
|
$ 1,468.9
|
|
$
202.9
|
|
$ 2,813.2
|
Total pre-tax non-GAAP
adjustments
|
1,743.8
|
|
(489.1)
|
|
4,008.6
|
|
2,040.2
|
Adjusted earnings
before income taxes
|
$
888.8
|
|
$
979.8
|
|
$ 4,211.5
|
|
$ 4,853.4
|
|
|
|
|
|
|
|
|
U.S. GAAP income tax
(benefit) provision
|
$
(89.4)
|
|
$
457.7
|
|
$
148.2
|
|
$
734.6
|
Adjusted tax expense
(benefit)
|
231.6
|
|
(301.0)
|
|
525.6
|
|
41.7
|
Adjusted income tax
provision
|
$
142.2
|
|
$
156.7
|
|
$
673.8
|
|
$
776.3
|
|
|
|
|
|
|
|
|
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)
|
Refer to "Certain Key
Terms and Presentation Matters" section in this release for more
information on reclassifications related to TSA
reimbursements.
|
(c)
|
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.
|
Reconciliation of
Estimated 2024 U.S. GAAP Net Cash Provided by Operating
Activities to Free Cash Flow
(Unaudited)
A reconciliation of the
estimated 2024 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)
|
$2,750 -
$3,050
|
|
|
Less: Capital
Expenditures
|
$(350) -
($450)
|
|
|
Free Cash
Flow(a)
|
$2,300 -
$2,700
|
___________
|
(a)
|
Includes the full-year
expected performance for the pending announced divestitures and
excludes any potential related costs, such as taxes and transaction
costs. Also excludes any acquired IPR&D to be incurred in any
future period as it cannot be reasonably forecasted.
|
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SOURCE Viatris Inc.