01—Abstract
Summary
Summary of the 10-K filed May 7, 2020. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K, filed May 7, 2020 by Upjohn Inc. (now Viatris Inc.), is a special financial report filed under Rule 15d-2.
It contains only certified financial statements for the fiscal year ended December 31, 2019, because the Form S-4 registration statement, declared effective February 13, 2020, did not include them. The company was formed on February 14, 2019, and is a wholly-owned subsidiary of Pfizer Inc. It has not commenced operations and has no significant assets or liabilities. Its revenues, operating expenses, net income, and total assets are all reported as zero for the period, and it had 100 shares of common stock outstanding, all held by Pfizer.
KPMG LLP issued an unqualified opinion dated May 7, 2020. The filing's main significance for investors is the description of the planned Transaction. Pfizer's primarily off-patent branded and generic established medicines business (the Upjohn Business) is to be contributed to Upjohn and then spun off or split off to Pfizer stockholders.
Immediately afterward, it is to be combined with Mylan N.V. in an all-stock Reverse Morris Trust transaction, creating a new company named Viatris. Pfizer stockholders would own 57% of the combined company and former Mylan shareholders would own 43%. The filing states that Upjohn will issue $12 billiona of debt and make a $12 billion cash payment to Pfizer.
The transaction is expected to close in the second half of 2020, subject to Mylan shareholder approval and other customary conditions, including regulatory approvals. Because Upjohn had no operations in 2019, this filing provides no operating results or business performance data for the Upjohn Business itself. Investors should look to the Registration Statement on Form S-4 for the detailed description of the capital stock and the Transaction, as the filing refers to it for that information.
02—Key points
Key Highlights
- Filed as a special financial report under Rule 15d-2 because the Form S-4 did not contain certified financial statements for fiscal 2019.
- Upjohn Inc. was incorporated on February 14, 2019, and is a wholly-owned subsidiary of Pfizer Inc. with 100 common shares outstanding.
- The company had not commenced operations and reported zero revenues, operating expenses, net income, and total assets for the period from February 14, 2019 to December 31, 2019.
- The planned Transaction combines Pfizer's off-patent branded and generic established medicines business with Mylan N.V. in an all-stock Reverse Morris Trust, to be named Viatris.
- Pfizer stockholders would own 57% of the combined company and former Mylan shareholders would own 43%.
- Upjohn will issue $12 billion of debt and make a $12 billion cash payment to Pfizer as partial consideration for the Upjohn Business.
- The Transaction is expected to close in the second half of 2020, subject to Mylan shareholder approval and other customary conditions, including regulatory approvals.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Viatris kept $0.00.
- Revenue$11.37B100.0%
- Cost of revenue−$7.47B65.7%
- Gross profit$3.90B34.3%
- Operating costs−$3.18B28.0%
- Operating income$715.5M6.3%
- Interest, other & tax−$698.7M6.1%
- Net income$16.8M0.1%
Where FY2019 revenue went
$11.37B- Cost of revenue: $7.60B, 67% of revenue
- SG&A: $2.56B, 23% of revenue
- Net income: $16.8M, 0.1% of revenue
- R&D: $639.9M, 5.6% of revenue
- Interest, other & tax: $698.7M, 6.1% of revenue
Kept 0.1% as net incomeNet income $16.8M · 0.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed May 7, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $11.37B$11.27B | +0.9% |
| Cost of Revenue | $7.60B$7.43B | +2.3% |
| Gross Profit | $3.90B$4.00B | −2.6% |
| R&D Expenses | $639.90M$704.50M | −9.2% |
| SG&A Expenses | $2.56B$2.44B | +5.0% |
| Operating Expenses | $3.18B$3.10B | +2.8% |
| Operating Income | $715.50M$905.60M | −21.0% |
| Interest Expense | $517.30M$542.30M | −4.6% |
| Net Income | $16.80M$352.50M | −95.2% |
| EPS (Basic) | $0.03$0.69 | −95.7% |
| EPS (Diluted) | $0.03$0.68 | −95.6% |
| Shares Outstanding (Basic) | 515.70M514.50M | +0.2% |
| Shares Outstanding (Diluted) | 516.50M516.50M | 0.0% |
05—Questions
Frequently Asked Questions
Why did Upjohn Inc. file this Form 10-K?
Under Rule 15d-2, the Registration Statement on Form S-4, declared effective February 13, 2020, did not contain certified financial statements for the fiscal year ended December 31, 2019. The company therefore filed them under cover of the facing page of a Form 10-K.
What is the Transaction described in the filing?
Pfizer will contribute its primarily off-patent branded and generic established medicines business (the Upjohn Business) to Upjohn. Upjohn will then be spun off or split off to Pfizer stockholders and immediately combined with Mylan N.V. in an all-stock Reverse Morris Trust. The combined company will be named Viatris.
How will ownership of the combined company be split?
The filing states that Pfizer stockholders would own 57% of the combined new company, and former Mylan shareholders would own 43%.
Did Upjohn generate any revenue or income in 2019?
No. The filing reports zero revenues, operating expenses, income before taxes, and net income for the period from February 14, 2019 to December 31, 2019, and states that the company had not commenced operations.
What financing is associated with the Transaction?
The filing states that Upjohn will issue $12 billion of debt in connection with its separation from Pfizer and will make a cash payment of $12 billion to Pfizer as partial consideration for the contribution of the Upjohn Business.
06—Continue