01—Abstract
Summary
Summary of the 10-Q filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Viatris Inc. reported a third-quarter 2024 net profit of $94.8 milliona, or $0.08 per diluted share, on total revenues of $3.75 billion, down from $3.94 billion a year earlier.
Net sales fell to $3.74 billionb, with the filing attributing much of the decline to divestitures closed in 2023 and 2024, and gross profit dropped to $1.46 billion from $1.69 billion as restructuring-related costs for additional anticipated plant closures rose. For the nine months, Viatris posted a net loss of $117.7 million, compared with net earnings of $820.3 million in the prior-year period, driven by a $321.0 million goodwill impairment for the JANZ reporting unit, a $102.0 million IPR&D impairment, and $239.3 million of litigation settlements and other contingencies, net. Cash generation and balance sheet actions were significant during the period.
Net cash provided by operating activities was $1.82 billionc for the nine months, and proceeds from asset and business sales totaled $2.51 billion, mainly from the OTC, API and women's healthcare divestitures. Viatris repaid $2.34 billion of long-term debt, paid $431.5 million in dividends and repurchased $250.0 million of stock. Cash and cash equivalents rose to $1.88 billion, and long-term debt declined to $14.30 billion from $16.19 billion at year-end 2023.
In September 2024 the company also entered a $3.5 billiond revolving facility maturing in September 2029. Investors should note the Idorsia Transaction, which added $695 million of purchase price, including $345 million of contingent consideration, and a contingent consideration liability that stood at $540.6 million at quarter-end.
Net sales in Emerging Markets and Developed Markets declined on a reported basis, though constant-currency growth in the remaining business was positive in several segments. The company also reported a $0.12 quarterly dividend and a board declaration of another $0.12 dividend in November 2024.
02—Key points
Key Highlights
- Q3 2024 net earnings of $94.8 million ($0.08 diluted EPS), versus $331.6 million ($0.27) in Q3 2023; total revenues of $3.75 billion versus $3.94 billion.
- Nine-month net loss of $117.7 million (diluted EPS of $(0.10)) versus net earnings of $820.3 million in the prior-year period, reflecting a $321.0 million JANZ goodwill impairment and a $102.0 million IPR&D impairment.
- Gross profit fell to $1.46 billion in Q3 2024 (39% gross margin) from $1.69 billion (43%), with restructuring costs for additional anticipated plant closures cited as a driver.
- Net cash provided by operating activities was $1.82 billion for the nine months, versus $2.33 billion a year earlier, while asset and business sale proceeds of $2.51 billion boosted investing cash flow.
- Long-term debt fell to $14.30 billion from $16.19 billion at December 31, 2023, following the Senior Notes repayments and tender offers in September 2024.
- Idorsia Transaction acquired selatogrel and cenerimod development programs for a $350 million upfront payment, with contingent consideration of $540.6 million on the balance sheet at September 30, 2024.
- Adjusted EBITDA was $1.28 billion for Q3 2024 versus $1.36 billion, and the company paid a $0.12 quarterly dividend and declared another $0.12 dividend in November 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Viatris kept $0.03.
- Revenue$3.74B100.0%
- Cost of revenue−$2.28B61.0%
- Gross profit$1.46B39.0%
- Operating costs−$1.23B33.0%
- Operating income$225.9M6.0%
- Interest, other & tax−$131.1M3.5%
- Net income$94.8M2.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 7, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $3.74B$3.93B | −5.0% |
| Cost of Revenue | $2.29B$2.25B | +1.8% |
| Gross Profit | $1.46B$1.69B | −13.7% |
| R&D Expenses | $198.40M$211.20M | −6.1% |
| SG&A Expenses | $1.00B$1.05B | −4.8% |
| Operating Expenses | $1.23B$1.24B | −0.5% |
| Operating Income | $225.90M$451.70M | −50.0% |
| Interest Expense | $145.60M$141.50M | +2.9% |
| Net Income | $94.80M$331.60M | −71.4% |
| EPS (Basic) | $0.08$0.28 | −71.4% |
| EPS (Diluted) | $0.08$0.27 | −70.4% |
| Shares Outstanding (Basic) | 1.19B1.20B | −0.5% |
| Shares Outstanding (Diluted) | 1.20B1.21B | −0.6% |
05—Questions
Frequently Asked Questions
Why did Viatris report a net loss for the first nine months of 2024?
The nine-month net loss of $117.7 million reflects a $321.0 million goodwill impairment charge tied to the JANZ reporting unit, a $102.0 million IPR&D intangible asset impairment, and $239.3 million of litigation settlements and other contingencies, net. Earnings from operations were $189.9 million, compared with $1.22 billion a year earlier.
How did divestitures affect Viatris's revenue in the third quarter?
The filing states that net sales decreased by approximately $290.7 million, or 7%, due to the inclusion of net sales in the prior-year period from businesses divested in 2023 and 2024. On a constant currency basis, net sales from the remaining business increased by approximately $109.4 million, or 3%, driven by new product sales of approximately $133.1 million.
What did Viatris do with its cash and capital during the period?
Viatris received $2.51 billion from sales of assets and subsidiaries, primarily the OTC, API and women's healthcare businesses. It repaid $2.34 billion of long-term debt, paid $431.5 million in cash dividends, and repurchased $250.0 million of common stock. Cash and cash equivalents ended the quarter at $1.88 billion.
What is the Idorsia Transaction and what financial obligations does it create?
On March 15, 2024, Viatris acquired development programs for selatogrel and cenerimod from Idorsia for an upfront payment of $350 million. The purchase price allocated was $695 million, including estimated contingent consideration of about $345 million at acquisition. The contingent consideration liability was $389.0 million at September 30, 2024, and potential future milestone payments include $300 million for development and regulatory milestones and $2.1 billion for tiered sales milestones.
Is Viatris in compliance with its debt covenants?
Yes. The filing states that the company is in compliance with its covenants at September 30, 2024 and expects to remain in compliance for the next twelve months. The 2024 Revolving Facility and the YEN Term Loan Facility require a Maximum Leverage Ratio of 3.75 to 1.00.
06—Continue