01—Abstract
Summary
Summary of the 10-K filed February 28, 2024. Cited figures are marked; the original filing is the authoritative source.
Viatris Inc. reported total revenues of $15.43 billiona for 2023, down $835.8 million, or 5%, from $16.26 billion in 2022.
Net sales were $15.39 billion, and net earnings fell sharply to $54.7 millionb, or $0.05 per diluted share, from $2.08 billion ($1.71 per share) in 2022. The decline reflects the November 2022 divestiture of the biosimilars business to Biocon Biologics, a $580.1 million goodwill impairment and a $734.7 million total charge tied to the planned OTC Business divestiture, and a $1.75 billion gain recorded in 2022 that did not recur. Adjusted EBITDA was $5.12 billion, versus $5.78 billion in 2022.
The company is in what it calls Phase 1 of a two-phased strategy, focused on stabilizing the base business, reducing debt, keeping an investment grade rating and returning capital, and it is pursuing a series of divestitures and acquisitions to simplify the portfolio. Pending Announced Divestitures include the OTC Business, which Viatris expects to receive gross proceeds of up to about $2.17 billionc for, and other businesses with up to about $1.4 billion in aggregate proceeds. Cash from operations was $2.80 billion, and the company repaid about $1.25 billion of senior notes during 2023.
Share repurchases totaled $250 milliond in 2023 and the buyback authorization was raised to $2.0 billion in February 2024. On February 28, 2024, Viatris announced it will acquire development programs for selatogrel and cenerimod from Idorsia for an upfront payment of $350 million, plus potential milestones and royalties. Investors should weigh the sharp drop in 2023 earnings, the remaining divestiture closings (expected in 2024 and mid-2024), and the company's continued exposure to pricing pressure and generic competition across its markets.
02—Key points
Key Highlights
- Total revenues were $15.43 billion in 2023, down $835.8 million, or 5%, from $16.26 billion in 2022.
- Net earnings declined to $54.7 million ($0.05 per diluted share) from $2.08 billion ($1.71 per diluted share) in 2022, largely because 2022 included a $1.75 billion gain on the Biocon Biologics Transaction.
- Adjusted EBITDA was $5.12 billion in 2023 versus $5.78 billion in 2022; adjusted gross margin was approximately 59% in both years.
- A $580.1 million goodwill impairment and an estimated $735 million pre-tax loss were recorded in Q4 2023 related to the planned OTC Business divestiture.
- Pending Announced Divestitures could bring gross proceeds of up to about $2.17 billion for the OTC Business and up to about $1.4 billion for the remaining businesses; the OTC Transaction is expected to close by mid-year 2024.
- Cash from operating activities was $2.80 billion; the company repaid about $1.25 billion of senior notes and paid $575.6 million in dividends during 2023.
- The share repurchase authorization was increased by $1.0 billion to $2.0 billion on February 26, 2024, with $500 million repurchased through February 28, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Viatris kept $0.00.
- Revenue$15.39B100.0%
- Cost of revenue−$8.95B58.2%
- Gross profit$6.44B41.8%
- Operating costs−$5.67B36.9%
- Operating income$766.2M5.0%
- Interest, other & tax−$711.5M4.6%
- Net income$54.7M0.4%
Where FY2023 revenue went
$15.39B- Cost of revenue: $8.99B, 58% of revenue
- SG&A: $4.07B, 26% of revenue
- Net income: $54.7M, 0.4% of revenue
- Other operating costs: $1.56B, 10% of revenue
- Interest, other & tax: $711.5M, 4.6% of revenue
Kept 0.4% as net incomeNet income $54.7M · 0.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 28, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $15.39B$16.22B | −5.1% |
| Cost of Revenue | $8.99B$9.77B | −8.0% |
| Gross Profit | $6.44B$6.50B | −0.9% |
| SG&A Expenses | $4.07B$4.18B | −2.6% |
| Operating Expenses | $5.67B$4.88B | +16.2% |
| Operating Income | $766.20M$1.61B | −52.6% |
| Interest Expense | $573.10M$592.40M | −3.3% |
| Net Income | $54.70M$2.08B | −97.4% |
| EPS (Basic) | $0.05$1.71 | −97.1% |
| EPS (Diluted) | $0.05$1.71 | −97.1% |
| Shares Outstanding (Basic) | 1.20B1.21B | −1.0% |
| Shares Outstanding (Diluted) | 1.21B1.22B | −0.9% |
05—Questions
Frequently Asked Questions
Why did Viatris's net earnings fall so sharply in 2023?
Net earnings were $54.7 million in 2023 compared with $2.08 billion in 2022. The 2022 result included a gain of approximately $1.75 billion on the Biocon Biologics Transaction, which did not recur. In 2023, the company also recorded a $580.1 million goodwill impairment and an estimated $735 million pre-tax loss tied to the planned OTC Business divestiture, plus lower total revenues.
What are the main pending divestitures and when are they expected to close?
The Pending Announced Divestitures include the OTC Business, the women's healthcare business, and the API business in India, plus remaining commercialization rights in the Upjohn Distributor Markets. Viatris expects the women's healthcare and API business divestitures to close by the end of the first quarter of 2024 and the OTC Transaction to close by mid-year 2024, all subject to regulatory approvals and other closing conditions.
How much debt did Viatris repay and what is its liquidity position?
Viatris repaid approximately $1.25 billion of senior notes at maturity in 2023. It had $991.9 million of cash and cash equivalents at December 31, 2023, and access to $4.0 billion under its Revolving Facility maturing July 2026. Long-term debt was $16.19 billion at year end, and the company stated it was in compliance with its covenants.
What is the Idorsia transaction announced on February 28, 2024?
Viatris announced it will acquire the development programs and certain personnel for selatogrel and cenerimod from Idorsia for an upfront payment of $350 million, plus potential development and regulatory milestones and contingent sales milestones and tiered royalties. Both companies will share development costs, and Viatris will hold worldwide commercialization rights, with exceptions for cenerimod in Japan, South Korea and certain Asia-Pacific countries. Closing is subject to conditions.
How concentrated are Viatris's customers?
In 2023, McKesson Corporation and AmerisourceBergen Corporation each accounted for 10% of consolidated net sales, and Cardinal Health, Inc. accounted for 5%. The top three customers represented approximately 25% of consolidated total net sales in 2023, compared with 26% in 2022.
06—Continue