01—Abstract
Summary
Summary of the 10-K/A filed April 28, 2023. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A (Amendment No. 1) amends Viatris Inc.'s Annual Report for the fiscal year ended December 31, 2022, originally filed February 27, 2023.
The company is filing it to add Part III information (directors, executive compensation, security ownership, related-party transactions and auditor fees) because it does not intend to file a definitive proxy statement within 120 days of fiscal year-end. Other than the Part III content and new Section 302 certifications, the filing states that no other changes were made to the original filing. Viatris, formerly known as Upjohn Inc., was formed through the November 16, 2020 combination of Mylan and Pfizer's Upjohn business.
The filing reports 2022 total revenues of $16.26 billiona, U.S. GAAP net earnings of $2.08 billion, adjusted EBITDA of $5.78 billion and free cash flow of $2.55 billion. Management states it paid down approximately $3.3 billion of debt, increased the quarterly dividend to $0.12 per share, and completed approximately $250 million of share repurchases in January and February 2023 under a previously announced $1 billion program. The company also completed the Biocon Biologics transaction, receiving a $2 billion cash payment and approximately $1 billion of compulsory convertible preferred shares, representing about a 12.9% stake on a fully diluted basis.
Governance changes are central to this amendment. Scott A. Smith became Chief Executive Officer effective April 1, 2023, succeeding Michael Goettler, who ceased to serve as CEO and as a director on that date.
The Board has 12 directors, eight of whom are independent, and Robert J. Coury serves as Executive Chairman.
Management describes the company's two-phased strategy, with Phase 1 covering 2020 to 2023 and Phase 2 covering 2024 and beyond. Shareholders approved the say-on-pay proposal at approximately 90.7%b.
02—Key points
Key Highlights
- 2022 financial results: total revenues of $16.26 billion, U.S. GAAP net earnings of $2.08 billion, adjusted EBITDA of $5.78 billion, operating cash flow of $2.95 billion and free cash flow of $2.55 billion.
- Capital allocation: approximately $3.3 billion of debt paid down, dividends of approximately $580 million paid in 2022, quarterly dividend raised to $0.12 per share, and approximately $250 million of share repurchases completed in January and February 2023 under a $1 billion authorization.
- Biocon Biologics transaction completed, with a $2 billion cash payment and approximately $1 billion of compulsory convertible preferred shares representing about a 12.9% stake on a fully diluted basis.
- Leadership change: Scott A. Smith became CEO effective April 1, 2023, and Michael Goettler ceased to serve as CEO and director on that date; Smith's offer letter provides a $1.4 million base salary.
- Board and governance: 12 directors, 8 of whom are independent; Robert J. Coury is Executive Chairman and Mark W. Parrish is Lead Independent Director and Vice Chairman. The Board's classified structure will be declassified starting with the 2023 annual meeting.
- Shareholder support: approximately 90.7% approval of the 2022 advisory say-on-pay vote, and no cash retention award was provided to Mr. Smith.
- Ownership: The Vanguard Group (12.5%), BlackRock, Inc. (7.8%) and State Street Corporation (5.2%) are the disclosed holders of more than 5% of the 1,199,008,181 common shares outstanding as of April 24, 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Viatris kept $0.13.
- Revenue$16.22B100.0%
- Cost of revenue−$9.72B59.9%
- Gross profit$6.50B40.1%
- Operating costs−$4.88B30.1%
- Operating income$1.61B10.0%
- Interest, other & tax$463.7M2.9%
- Net income$2.08B12.8%
Where FY2022 revenue went
$16.22B- Cost of revenue: $9.77B, 60% of revenue
- SG&A: $4.18B, 26% of revenue
- Operating income: $1.61B, 10.0% of revenue
- Other operating costs: $658.4M, 4.1% of revenue
Kept 10.0% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2022filed April 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $16.22B$17.81B | −9.0% |
| Cost of Revenue | $9.77B$12.31B | −20.7% |
| Gross Profit | $6.50B$5.58B | +16.5% |
| SG&A Expenses | $4.18B$4.53B | −7.7% |
| Operating Expenses | $4.88B$5.61B | −13.0% |
| Operating Income | $1.61B-$34.00M | +4849.7% |
| Interest Expense | $592.40M$636.20M | −6.9% |
| Net Income | $2.08B-$1.27B | +263.8% |
| EPS (Basic) | $1.71$-1.05 | +262.9% |
| EPS (Diluted) | $1.71$-1.05 | +262.9% |
| Shares Outstanding (Basic) | 1.21B1.21B | +0.3% |
| Shares Outstanding (Diluted) | 1.22B1.21B | +0.7% |
05—Questions
Frequently Asked Questions
Why was this 10-K/A filed?
The company is filing this amendment to include Part III information that was not in the original filing, because it does not intend to file a definitive proxy statement within 120 days of the fiscal year ended December 31, 2022. The amendment also includes new Section 302 certifications from the principal executive and financial officers.
What were Viatris's main 2022 financial results?
The filing reports total revenues of $16.26 billion, U.S. GAAP net earnings of $2.08 billion, adjusted EBITDA of $5.78 billion, U.S. GAAP net cash provided by operating activities of $2.95 billion, and free cash flow of $2.55 billion. Adjusted EBITDA and free cash flow are non-GAAP measures reconciled to U.S. GAAP in Appendix A.
How is the company returning capital to shareholders?
Viatris paid approximately $580 million in dividends in 2022 and raised its quarterly dividend to $0.12 per share. It also completed approximately $250 million of share repurchases in January and February 2023 as part of a previously announced $1 billion stock repurchase program.
What is the company's strategy going forward?
Management describes a two-phased strategy. Phase 1 (2020 to 2023) focuses on integration, execution, synergy capture, debt reduction and a global reshaping initiative. Phase 2 (2024 and beyond) is expected to be a period of renewed growth. The filing identifies over-the-counter products, active pharmaceutical ingredients, certain women's healthcare products and select smaller geographic markets as businesses no longer considered core, and it announced two ophthalmology transactions and an eye care division established in early 2023.
Who leads the company and how is the board structured?
Scott A. Smith became CEO effective April 1, 2023, and Robert J. Coury serves as Executive Chairman. Rajiv Malik is President. The Board has 12 directors, eight of whom are independent, and the Board's leadership structure separates the Chairman and CEO roles, with Mark W. Parrish as Lead Independent Director and Vice Chairman.
06—Continue