Viatris Inc. (NASDAQ: VTRS) today reported strong results for the second quarter of 2022 and provided an update to its full year 2022 financial guidance.
[2] Please see footnote [1] above as well as “2022 Financial Guidance” and “Non-GAAP Financial Measures” for additional information.
Viatris also announced that its Board of Directors declared a quarterly dividend of twelve cents ($0.12) for each issued and outstanding share of the company’s common stock. The dividend is payable on Sept. 16, 2022, to shareholders of record at the close of business on Aug. 24, 2022.
Viatris CEO Michael Goettler said: “We are hitting on all cylinders operationally, even while foreign exchange rates continue to be challenging, and have now demonstrated six consecutive quarters of strong performance. We continue to deliver on our financial and strategic commitments and are making good progress on all the reshaping initiatives announced in February, including the further ramp up of our inorganic activity in our Global Healthcare Gateway.”
Viatris President Rajiv Malik said: “We believe our strong and consistent operational execution reflects the resilience of a diversified business that has been built deliberately to ensure we are not dependent on any one market or product and allows us to remain agile and opportunistic to perform consistently across all geographies. Looking ahead, we are very excited to build upon our strong legacy in development and leverage our extensive scientific capabilities to continue moving up the value chain. Through our Global Healthcare Gateway, we expect to further strengthen our deep pipeline to develop more 505(b)(2)s and new chemical entities in the previously disclosed therapeutic areas, while maintaining our therapeutically agnostic portfolio.”
Viatris CFO Sanjeev Narula said: “We are proud of our solid operational results which exceeded our expectations and included generating approximately $1.8 billion in free cash flow in the first half of 2022. We also retired $1.5 billion in debt during the same period, which puts us well on track to meet our 2022 debt paydown commitment. As we look ahead to the rest of 2022, we remain confident in the operational strength of the business. Therefore, we are reaffirming our adjusted EBITDA and free cash flow guidance ranges despite foreign exchange headwinds. We believe that our capital allocation framework, including the commitment to the dividend and maintaining the investment grade rating, will continue to be a force in creating long term value.”
Financial Summary
|
Three Months Ended |
|||||||
|
June 30, |
|||||||
|
(Unaudited; in millions, except per share amounts and %s) |
2022 |
2021 |
Reported Change |
Operational Change(1) |
|||
|
Total Net Sales |
$ 4,105.4 |
$ 4,561.7 |
(10) % |
(3) % |
|||
|
Developed Markets |
2,479.1 |
2,640.4 |
(6) % |
1 % |
|||
|
Emerging Markets |
650.9 |
870.0 |
(25) % |
(19) % |
|||
|
JANZ |
427.1 |
501.0 |
(15) % |
(2) % |
|||
|
Greater China |
548.3 |
550.3 |
— % |
1 % |
|||
|
Net Sales by Product Category |
|||||||
|
Brands |
$ 2,483.1 |
$ 2,701.7 |
(8) % |
(1) % |
|||
|
Complex Gx and Biosimilars |
354.8 |
332.8 |
7 % |
11 % |
|||
|
Generics |
1,267.5 |
1,527.2 |
(17) % |
(11) % |
|||
|
U.S. GAAP Gross Profit |
$ 1,703.3 |
$ 1,327.7 |
28 % |
||||
|
U.S. GAAP Gross Margin |
41.4 % |
29.0 % |
|||||
|
Adjusted Gross Profit (2) |
$ 2,411.7 |
$ 2,677.2 |
(10) % |
||||
|
Adjusted Gross Margin (2) |
58.6 % |
58.5 % |
|||||
|
U.S. GAAP Net Earnings (Loss) |
$ 313.9 |
$ (279.2) |
nm |
||||
|
Adjusted Net Earnings (2) |
$ 1,065.3 |
$ 1,180.6 |
(10) % |
||||
|
EBITDA (2) |
$ 1,257.6 |
$ 1,281.8 |
(2) % |
||||
|
Adjusted EBITDA (2) |
$ 1,482.1 |
$ 1,675.4 |
(12) % |
(6) % |
|||
|
U.S. GAAP net cash provided by operating activities |
$ 802.5 |
$ 559.4 |
43 % |
||||
|
Capital expenditures |
83.9 |
89.3 |
(6) % |
||||
|
Free cash flow (2) |
$ 718.6 |
$ 470.1 |
53 % |
||||
|
Six Months Ended |
|||||||
|
June 30, |
|||||||
|
(Unaudited; in millions, except per share amounts and %s) |
2022 |
2021 |
Reported Change |
Operational Change(1) |
|||
|
Total Net Sales |
$ 8,283.6 |
$ 8,961.8 |
(8) % |
(2) % |
|||
|
Developed Markets |
4,955.2 |
5,212.0 |
(5) % |
— % |
|||
|
Emerging Markets |
1,356.1 |
1,624.7 |
(17) % |
(10) % |
|||
|
JANZ |
850.9 |
982.9 |
(13) % |
(3) % |
|||
|
Greater China |
1,121.4 |
1,142.2 |
(2) % |
(2) % |
|||
|
Net Sales by Product Category |
|||||||
|
Brands |
$ 5,037.2 |
$ 5,426.3 |
(7) % |
(1) % |
|||
|
Complex Gx and Biosimilars |
745.6 |
661.7 |
13 % |
16 % |
|||
|
Generics |
2,500.8 |
2,873.8 |
(13) % |
(8) % |
|||
|
U.S. GAAP Gross Profit |
$ 3,474.5 |
$ 2,455.0 |
42 % |
||||
|
U.S. GAAP Gross Margin |
41.8 % |
27.3 % |
|||||
|
Adjusted Gross Profit (2) |
$ 4,905.1 |
$ 5,317.1 |
(8) % |
||||
|
Adjusted Gross Margin (2) |
59.0 % |
59.0 % |
|||||
|
U.S. GAAP Net Earnings (Loss) |
$ 713.1 |
$ (1,316.8) |
nm |
||||
|
Adjusted Net Earnings (2) |
$ 2,190.6 |
$ 2,297.0 |
(5) % |
||||
|
EBITDA (2) |
$ 2,667.2 |
$ 2,449.9 |
9 % |
||||
|
Adjusted EBITDA (2) |
$ 3,068.4 |
$ 3,312.0 |
(7) % |
(3) % |
|||
|
U.S. GAAP net cash provided by operating activities |
$ 1,941.0 |
$ 1,408.2 |
38 % |
||||
|
Capital expenditures |
148.4 |
138.8 |
7 % |
||||
|
Free cash flow (2) |
$ 1,792.6 |
$ 1,269.4 |
41 % |
||||
|
___________ |
|
|
(1) |
Represents operational change for net sales and adjusted EBITDA which excludes the impacts of foreign currency translation. See “Certain Key Terms” in this release for more information. |
|
(2) |
Non-GAAP financial measures. See “Non-GAAP Financial Measures” for additional information. |
Second Quarter Highlights
- Second quarter 2022 net sales totaled $4.1 billion, down 3% on an operational basis compared to Q2 2021 results and performed better than expectations, driven by solid performance across our segments—Developed Markets, Emerging Markets, JANZ (Japan, Australia and New Zealand) and Greater China.
- Brands performed better than expectations, driven by products such as EpiPen®, Norvasc® and Lipitor®.
- Complex generics and biosimilars performed largely in line with expectations and grew by 11% on an operational basis compared to Q2 2021 results, mainly driven by our interchangeable Semglee® launch in the U.S. Revenues from the biosimilars portfolio to be contributed to Biocon Biologics totaled approximately $167 million in the quarter.
- Generics, which include diversified product forms such as extended-release oral solids, injectables, transdermals and topicals, performed better than expectations driven by higher North America demand.
- The Company generated approximately $84 million in new product revenues (as defined in “Certain Key Terms” below) in the second quarter (approximately $205 million for the first half of the year) primarily driven by interchangeable Semglee® in the U.S. and is on track to achieve approximately $600 million in new product revenues in 2022.
- The Company generated $719 million of free cash flow in the second quarter ($1.79 billion for the first half of the year), primarily driven by solid U.S. GAAP net cash provided by operating activities of $803 million in the quarter ($1.94 billion for the first half of the year) and the timing of planned capital expenditures.
- Viatris paid quarterly cash dividends of twelve cents ($0.12) per share on the Company’s issued and outstanding common stock on March 16, 2022, and June 16, 2022. On Aug. 4, 2022, the Company’s Board of Directors declared a quarterly dividend of twelve cents ($0.12) per share on the Company’s issued and outstanding common stock, which will be payable on Sept. 16, 2022, to shareholders of record as of the close of business on Aug. 24, 2022. The Company paid down approximately $627 million in debt in the second quarter (approximately $1.5 billion for the first half of the year) and continues to target approximately $2 billion in debt repayment in 2022. The Company remains committed to maintaining its investment grade credit rating.
2022 Financial Guidance
The U.S. dollar has continued to strengthen across major currencies that impact the Company’s condensed consolidated financial statements. To reflect the Company’s currently expected negative impact of foreign exchange rates of approximately $800 million, the Company is revising its 2022 guidance range for total revenues as set forth above. The Company is reaffirming its 2022 guidance ranges for adjusted EBITDA and free cash flow as it currently believes that it can absorb the foreign exchange rate impacts within those ranges. The Company is not providing forward-looking guidance for U.S. GAAP net earnings or a quantitative reconciliation of its 2022 adjusted EBITDA guidance to the most directly comparable U.S. GAAP measure, U.S. GAAP net earnings (loss), because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items, including integration and acquisition-related expenses, restructuring expenses, asset impairments, litigation settlements and other contingencies, such as changes to contingent consideration and certain other gains or losses, 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.
About Viatris
Viatris Inc. (NASDAQ: VTRS) is a global pharmaceutical 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, a portfolio of biosimilars and a variety of over-the-counter consumer products. With approximately 37,000 colleagues globally, Viatris is headquartered in the U.S., with global centers in Pittsburgh, Shanghai and Hyderabad, India. Learn more at viatris.com and investor.viatris.com, and connect with us on Twitter at @ViatrisInc, LinkedIn and YouTube.
