01—Abstract
Summary
Summary of the 10-Q filed May 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Viatris Inc. reported first-quarter 2024 total revenues of $3.66 billiona, down $65.7 million, or 2%, from $3.73 billion a year earlier.
Net sales were $3.65 billionb. Earnings from operations fell to $203.9 million from $399.8 million, mainly because litigation settlements and other contingencies, net, rose to $76.8 million from $0.6 million and SG&A increased to $1.02 billion. Net earnings were $113.9 million, or $0.09 per diluted share, versus $224.7 million, or $0.19, in the prior-year period.
Other income, net, of $139.1 millionc, which included an $80.8 million gain on the women's healthcare business divestiture and a $46.9 million gain on remeasuring the Biocon Biologics CCPS, partly offset the operating decline. Adjusted EBITDA was $1.19 billion versus $1.34 billion, and net cash from operating activities was $614.6 million versus $971.2 million. The balance sheet shows total assets of $47.34 billion and total equity of $20.01 billion at March 31, 2024.
Long-term debt was $16.07 billiond. The company acquired selatogrel and cenerimod development programs from Idorsia for an upfront payment of $350 million, recorded as a business combination with $675 million of IPR&D and roughly $345 million of contingent consideration. The company repurchased about $250 million of stock in the quarter and paid a $0.12 quarterly dividend.
Its share repurchase authorization was raised by $1.0 billion to $2.0 billion, with $500 million repurchased under the program to date. Pending divestitures continue to shape the outlook.
The OTC Business sale to Cooper Consumer Health is expected to close by mid-year 2024, the API business in India is expected to close imminently, and the women's healthcare business closed in March 2024. The filing also describes a number of pending legal matters, including opioid-related cases with $150.7 million accrued and EpiPen-related antitrust and securities litigation, and notes that the company is in compliance with its debt covenants.
02—Key points
Key Highlights
- Total revenues were $3.66 billion, down $65.7 million, or 2%, year over year; constant currency net sales rose about $57.2 million, or 2%, excluding divestitures, driven by $154.5 million of new product sales.
- Earnings from operations fell to $203.9 million from $399.8 million, reflecting $76.8 million of litigation settlements and other contingencies and higher SG&A of $1.02 billion.
- Net earnings were $113.9 million, or $0.09 per diluted share, compared with $224.7 million, or $0.19 per diluted share, in Q1 2023.
- Adjusted net earnings were $812.7 million, or $0.67 per share, versus $932.9 million, or $0.77 per share, a year earlier.
- Net cash provided by operating activities was $614.6 million, down from $971.2 million, principally due to lower operating earnings and the timing of cash payments and collections.
- Viatris acquired Idorsia's selatogrel and cenerimod programs for a $350 million upfront payment, recording $675 million of IPR&D, and repurchased about $250 million of common stock during the quarter.
- The OTC Business divestiture to Cooper Consumer Health is expected to close by mid-year 2024, and the women's healthcare business divestiture closed in March 2024 with an $80.8 million pre-tax gain.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Viatris kept $0.03.
- Revenue$3.65B100.0%
- Cost of revenue−$2.15B58.8%
- Gross profit$1.50B41.2%
- Operating costs−$1.30B35.6%
- Operating income$203.9M5.6%
- Interest, other & tax−$90.0M2.5%
- Net income$113.9M3.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 9, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.65B$3.72B | −1.8% |
| Cost of Revenue | $2.16B$2.19B | −1.3% |
| Gross Profit | $1.50B$1.54B | −2.5% |
| R&D Expenses | $199.70M$182.90M | +9.2% |
| SG&A Expenses | $1.02B$958.90M | +6.1% |
| Operating Expenses | $1.30B$1.14B | +13.8% |
| Operating Income | $203.90M$399.80M | −49.0% |
| Interest Expense | $138.40M$147.00M | −5.9% |
| Net Income | $113.90M$224.70M | −49.3% |
| EPS (Basic) | $0.10$0.19 | −47.4% |
| EPS (Diluted) | $0.09$0.19 | −52.6% |
| Shares Outstanding (Basic) | 1.20B1.20B | −0.6% |
| Shares Outstanding (Diluted) | 1.21B1.21B | +0.3% |
05—Questions
Frequently Asked Questions
Why did Viatris's net earnings decline so sharply in the first quarter of 2024?
Net earnings fell to $113.9 million from $224.7 million. Earnings from operations dropped to $203.9 million from $399.8 million, driven by $76.8 million of litigation settlements and other contingencies, net, versus $0.6 million a year earlier, and a rise in SG&A to $1.02 billion from $958.9 million. Other income, net, of $139.1 million partly offset these pressures, including an $80.8 million gain on the women's healthcare divestiture.
What drove the change in revenue during the quarter?
Total revenues decreased $65.7 million, or 2%, to $3.66 billion. Foreign currency translation had an unfavorable impact of about $77.1 million, and divestitures closed in 2023 and 2024 reduced net sales by about $45.7 million. On a constant currency basis, net sales from the remaining business rose about $57.2 million, or 2%, led by new product sales of approximately $154.5 million, partly offset by base business erosion of about $97.3 million.
What are the pending divestitures and their expected impact?
The OTC Business is being sold to Cooper Consumer Health and is expected to close by mid-year 2024, subject to regulatory approvals and other conditions. The API business in India is expected to close imminently. The rights to two women's healthcare products in certain countries closed in December 2023, except in the U.K., and the women's healthcare business closed in March 2024, with a pre-tax gain of about $80.8 million.
How is Viatris returning capital to shareholders?
The company paid cash dividends of $142.8 million and repurchased $250 million of common stock in the quarter. The Board raised the share repurchase authorization by $1.0 billion to $2.0 billion, and $500 million had been repurchased under the program as of March 31, 2024. On May 6, 2024, the Board declared a quarterly dividend of $0.12 per share, payable June 14, 2024.
What litigation exposures does the filing highlight?
The filing discloses ongoing matters including opioid-related lawsuits, with $150.7 million accrued for possible resolution of certain matters, and EpiPen Auto-Injector antitrust and securities litigation. Viatris also accrued about $65.3 million for product liability matters and about $5.5 million for EpiPen-related matters. The company states that unfavorable outcomes of ongoing matters could have a material effect on its business, results of operations, and cash flows.
06—Continue