01—Abstract
Summary
Summary of the 10-Q filed August 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Viatris Inc. reported a net loss of $326.4 milliona, or $(0.27) per diluted share, for the three months ended June 30, 2024, compared with net earnings of $264.0 million, or $0.22 per diluted share, in the prior-year quarter.
Total revenues were $3.80 billionb, down $122.0 million, or 3%, from $3.92 billion. The decline reflected unfavorable foreign currency translation of approximately $98.9 million and the impact of divestitures that closed during 2023 and 2024. Results were pressured by a $321.0 million goodwill impairment charge related to the JANZ reporting unit, a $102.0 million IPR&D intangible asset impairment, a $247.6 million additional write-down of the OTC Business disposal group, and litigation settlements and other contingencies, net of $131.0 million for the quarter.
For the six months ended June 30, 2024, Viatris reported a net loss of $212.5 millionc, or $(0.18) per diluted share, on total revenues of $7.46 billion. Cash flow and balance sheet items were mixed. Net cash provided by operating activities was $993.7 million for the six months ended June 30, 2024, down $502.6 million from $1.50 billion, and the company returned cash through $288.3 million of dividends paid and $250.0 million of share repurchases.
Total debt repayments included approximately $801.7 milliond on the 1.023% Euro Senior Notes at maturity. Long-term debt declined to $14.73 billion from $16.19 billion at year-end 2023, and total equity fell to $19.52 billion from $20.47 billion. The company stated it was in compliance with its covenants at June 30, 2024.
Portfolio changes were significant during the period. Viatris acquired the development programs for selatogrel and cenerimod from Idorsia for an upfront payment of $350 million, recorded as a business combination with $675 million of IPR&D.
The women's healthcare business divestiture closed in March 2024, and the API business in India closed in June 2024. The OTC Transaction with Cooper Consumer Health SAS closed on July 3, 2024, after the period end.
02—Key points
Key Highlights
- Net loss of $326.4 million, or $(0.27) per diluted share, for Q2 2024, versus net earnings of $264.0 million, or $0.22 per diluted share, in Q2 2023.
- Total revenues were $3.80 billion for Q2 2024, down $122.0 million, or 3%; net sales declined partly due to unfavorable foreign currency translation of approximately $98.9 million.
- A $321.0 million goodwill impairment related to the JANZ reporting unit was recorded in SG&A, and a $102.0 million IPR&D intangible asset impairment was recorded in cost of sales in Q2 2024.
- Litigation settlements and other contingencies, net was a $131.0 million charge in Q2 2024, compared with an $11.0 million gain in Q2 2023.
- Net cash provided by operating activities was $993.7 million for the six months ended June 30, 2024, down $502.6 million year over year.
- Viatris paid $288.3 million in dividends and repurchased $250.0 million of common stock in the first six months of 2024; the total repurchased under the program since inception is $500 million.
- The OTC Transaction with Cooper Consumer Health SAS closed on July 3, 2024, after the quarter end, and the company recorded an additional pre-tax charge of approximately $247.6 million on the OTC disposal group during Q2 2024.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2024, Viatris lost $0.09.
- Revenue$3.79B100.0%
- Cost of revenue−$2.34B61.8%
- Gross profit$1.45B38.2%
- Operating costs−$1.69B44.5%
- Operating income−$239.9M6.3%
- Interest, other & tax−$86.5M2.3%
- Net income−$326.4M8.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 8, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $3.79B$3.91B | −3.2% |
| Cost of Revenue | $2.35B$2.31B | +1.8% |
| Gross Profit | $1.45B$1.61B | −10.1% |
| R&D Expenses | $204.10M$208.30M | −2.0% |
| SG&A Expenses | $1.04B$1.03B | +0.5% |
| Operating Expenses | $1.69B$1.24B | +36.0% |
| Operating Income | -$239.90M$369.20M | −165.0% |
| Interest Expense | $145.80M$143.70M | +1.5% |
| Net Income | -$326.40M$264.00M | −223.6% |
| EPS (Basic) | $-0.27$0.22 | −222.7% |
| EPS (Diluted) | $-0.27$0.22 | −222.7% |
| Shares Outstanding (Basic) | 1.19B1.20B | −0.7% |
| Shares Outstanding (Diluted) | 1.19B1.20B | −1.0% |
05—Questions
Frequently Asked Questions
Why did Viatris report a net loss in the second quarter of 2024?
The net loss of $326.4 million was driven by operating items including a $321.0 million goodwill impairment for the JANZ reporting unit, a $102.0 million IPR&D intangible asset impairment, $131.0 million of net litigation settlements and other contingencies, and a $247.6 million additional write-down of the OTC Business disposal group recorded in other expense. The filing also notes that the goodwill impairment was not tax-deductible, which increased the tax provision.
How did revenue and net sales change in the second quarter of 2024?
Total revenues were $3.80 billion, compared with $3.92 billion, a decrease of $122.0 million, or 3%. On a constant currency basis, net sales were down about 1%. New product sales in the U.S. of approximately $209.9 million partially offset base business erosion of approximately $125.4 million and the impact of divestitures.
What is the status of the divestitures announced in October 2023?
The women's healthcare business divestiture closed in March 2024, with a pre-tax gain of approximately $80.8 million recognized in that quarter. The API business in India closed in June 2024. The OTC Transaction closed on July 3, 2024. The remaining Upjohn Distributor Markets transactions are expected to be completed during 2024, and the filing notes that if they are not completed, the company may wind down operations in those markets.
How is Viatris funding its operations, dividends and share repurchases?
The company cited net cash provided by operating activities of $993.7 million for the six months ended June 30, 2024 as its primary source of liquidity. It had $917.2 million of cash and cash equivalents at June 30, 2024 and access to a $4.0 billion Revolving Facility with no borrowings outstanding. It also has a $400 million Receivables Facility and a $200 million Note Securitization Facility, both with no borrowings outstanding at quarter end.
What did Viatris acquire from Idorsia and how is it accounted for?
On March 15, 2024, Viatris acquired the development programs and certain personnel for selatogrel and cenerimod from Idorsia for an upfront payment of $350 million. The transaction was accounted for as a business combination with a purchase price of $695 million, including $675 million of IPR&D and estimated contingent consideration of approximately $345 million. The company also has potential milestone payments of $300 million for development and regulatory milestones and $2.1 billion for tiered sales milestones.
06—Continue