Viatris Reports Strong Financial and Operational Results for First Quarter 2023 and Reaffirms Full-Year 2023 Guidance Ranges[1] Reports Total Revenues of $3.73 billion; U.S. GAAP Net Earnings of $225 million; Adjusted EBITDA of $1.34 billion; U.S. GAAP Net Cash Provided by...

PITTSBURGH , May 8, 2023 /PRNewswire/ -- Viatris Inc . (NASDAQ: VTRS ) today reported strong results for the first quarter of 2023 reflecting another robust operational performance and instilling further confidence in the Company's ability to return to growth as it prepares to enter Phase 2 of its strategic plan in 2024.

Executive Commentary

Viatris CEO Scott A. Smith said: "Since becoming CEO, I have met with colleagues all over the globe and have had the opportunity to spend time with each business segment. I have seen firsthand the unique combination of passion, dedication and skills of the people of Viatris. The unwavering commitment to our mission is not only infectious but also is displayed by the great execution that has led to a strong start to the year and yet another quarter of robust operational performance. The strength of this quarter gives me further confidence in our ability to return to growth as we enter into Phase 2 in 2024.

Smith continued: "I want to reiterate that I firmly believe in the Company's strategic plan, including the capital allocation priorities, laid out in November. A critical part of my job is to enhance the already strong execution by the Company and, ideally, accelerate our well-crafted strategy. I look forward to the exciting path ahead."

Viatris President Rajiv Malik said: "We believe that we are headed into the final stages of completing all aspects of our Phase 1 commitments, which is a critical part of our two-phased strategy, driven primarily by the continued strength of our branded portfolio. Looking ahead, we have tremendous confidence in our ability to deliver on our full-year commitments based on effective management of our brands, $500 million -plus in expected new product launches and further progress of our pipeline, including the NDA for GA once-monthly that we filed with the FDA."

Viatris CFO Sanjeev Narula said: "We delivered a strong first quarter which met our expectations across all metrics. This included free cash flow generation of $923 million which was prioritized for debt paydown of $546 million . Since the beginning of 2021, we have paid down approximately $6 billion in debt. Additionally, in the quarter we returned approximately $400 million of capital to our shareholders in dividends and share buybacks. Based on our first quarter results and outlook for the rest of the year, we are reaffirming our 2023 financial guidance and remain confident in our Phase 2 outlook beginning in 2024."

Return of Capital to Shareholders

Viatris announced that, on May 5, 2023, its Board of Directors declared a quarterly dividend of twelve cents ($0.12) for each issued and outstanding share of the Company's common stock. The dividend is payable on June 16, 2023, to shareholders of record at the close of business on May 24, 2023.

Viatris paid a quarterly cash dividend of twelve cents ($0.12) per share on the Company's issued and outstanding common stock on March 17, 2023 . Additionally, in January and February 2023 , the Company repurchased approximately 21.2 million shares of common stock at a cost of approximately $250 million , as part of its previously announced $1 billion stock repurchase program authorized by Viatris' Board of Directors.

Conference Call and Earnings Materials

Viatris Inc. will host a conference call and live webcast, today at 8:30 a.m. ET , to review the Company's financial results for the first quarter ended March 31, 2023 .

Investors and the general public are invited to listen to a live webcast of the call at investor.viatris.com or by calling 800.579.2543 or 785.424.1789 for international callers (ID#: VTRSQ123). The "Viatris Q1 Earnings Presentation," which will be referenced during the call, can be found at investor.viatris.com . A replay of the webcast also will be available on the website.

[1] Viatris is not providing forward-looking guidance for U.S. GAAP net earnings (loss) or a quantitative reconciliation of its 2023 adjusted EBITDA guidance. U.S. GAAP net cash provided by operating activities for 2023 is estimated to be between $2.8 billion and $3.1 billion . Please see "2023 Financial Guidance" and "Non-GAAP Financial Measures" for additional information.

Financial Highlights

2023 Financial Guidance

Viatris is reaffirming its 2023 financial guidance that was previously provided on February 27, 2023 , as set forth below. The Company is not providing forward-looking guidance for U.S. GAAP net earnings or a quantitative reconciliation of its 2023 adjusted EBITDA guidance to the most directly comparable U.S. GAAP measure, U.S. GAAP net earnings, because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items, including integration, acquisition and divestiture related expenses, restructuring expenses, asset impairments, litigation settlements, and other contingencies, such as changes to contingent consideration, acquired IPR&D and certain other gains or losses, including for the fair value accounting for the compulsory convertible preferred shares ("CCPS") in Biocon Biologics, as well as related income tax accounting, because certain of these items have not occurred, are out of the Company's control and/or cannot be reasonably predicted without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period. U.S. GAAP net cash provided by operating activities for 2023 is estimated to be between $2.8 billion and $3.1 billion , with a midpoint of approximately $2.95 billion . The Company currently expects to be at the midpoint of the financial guidance ranges.

Certain Key Terms and Presentation Matters

New product sales, new product launches or new product revenues: Refers to revenue from new products launched in 2023 and the carryover impact of new products, including business development, launched within the last twelve months.

Operational change: Refers to constant currency percentage changes and is derived by translating amounts for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2023 constant currency net sales, revenues and adjusted EBITDA to the corresponding amount in the prior year.

Divestiture adjusted operational change: Refers to operational changes, further adjusted for the impact of the biosimilars divestiture in November 2022 by excluding biosimilars net sales from 2022 periods.

SG&A and R&D TSA reimbursement: Expenses related to TSA services provided to Biocon Biologics are recorded in their respective functional line item; however, reimbursement of those expenses plus the mark-up is included in other (income) expense, net. For comparability purposes, amounts related to the cost reimbursement are reclassified to adjusted SG&A and adjusted R&D. This reclassification has no impact on adjusted net earnings or adjusted EBITDA.

Non-GAAP Financial Measures

This press release includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("U.S. GAAP"). These non-GAAP financial measures, including, but not limited to, adjusted gross profit, adjusted gross margins, adjusted net earnings, EBITDA, adjusted EBITDA, free cash flow, adjusted R&D and as a % of total revenues, adjusted SG&A and as a % of total revenues, adjusted earnings from operations, adjusted interest expense, adjusted other (income) expense, net, adjusted effective tax rate, constant currency total revenues, constant currency net sales, constant currency adjusted EBITDA, 2022 adjusted net sales ex biosimilars, and divestiture adjusted operational change, are presented in order to supplement investors' and other readers' understanding and assessment of the financial performance of Viatris Inc. ("Viatris" or the "Company"). Free cash flow refers to U.S. GAAP net cash provided by operating activities less capital expenditures. Management uses these measures internally for forecasting, budgeting, measuring its operating performance, and incentive-based awards. Primarily due to acquisitions and other significant events which may impact comparability of our periodic operating results, Viatris believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results was limited to financial measures prepared only in accordance with U.S. GAAP. We believe that non-GAAP financial measures are useful supplemental information for our investors and when considered together with our U.S. GAAP financial measures and the reconciliation to the most directly comparable U.S. GAAP financial measure, provide a more complete understanding of the factors and trends affecting our operations. The financial performance of the Company is measured by senior management, in part, using adjusted metrics included herein, along with other performance metrics. In addition, the Company believes that including EBITDA and supplemental adjustments applied in presenting adjusted EBITDA is appropriate to provide additional information to investors to demonstrate the Company's ability to comply with financial debt covenants and assess the Company's ability to incur additional indebtedness. The Company also believes that adjusted EBITDA better focuses management on the Company's underlying operational results and true business performance and is used, in part, for management's incentive compensation. We also report sales performance using the non-GAAP financial measures of "constant currency", also referred to herein as "operational change", total revenues, net sales and adjusted EBITDA. These measures provide information on the change in total revenues, net sales and adjusted EBITDA assuming that foreign currency exchange rates had not changed between the prior and current period. The comparisons presented at constant currency rates reflect comparative local currency sales at the prior year's foreign exchange rates. We routinely evaluate our net sales, total revenues and adjusted EBITDA performance at constant currency so that sales results can be viewed without the impact of foreign currency exchange rates, thereby facilitating a period-to-period comparison of our operational activities, and believe that this presentation also provides useful information to investors for the same reason. Divestiture adjusted operational change refers to operational change, further adjusted for the impact of the biosimilars divestiture in November 2022 by excluding biosimilars net sales from 2022 periods. The "Summary of Total Revenues by Segment" table below compares net sales on an actual and constant currency basis for each reportable segment for the quarters ended March 31, 2023 and 2022 as well as for total revenues, as well as divestiture adjusted operational change in net sales. Also, set forth below, Viatris has provided reconciliations of such non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures. Investors and other readers are encouraged to review the related U.S. GAAP financial measures and the reconciliations of the non-GAAP measures to their most directly comparable U.S. GAAP measures set forth below, and investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with U.S. GAAP. For additional information regarding the components and uses of Non-GAAP financial measures refer to Management's Discussion and Analysis of Financial Condition and Results of Operations--Use of Non-GAAP Financial Measures section of Viatris' Quarterly Report on Form 10-Q for the three months ended March 31 , 2023.

The Company is not providing forward-looking U.S. GAAP information for its non-GAAP 2024 Phase 2 outlooks or quantitative reconciliations with respect to such outlooks to their most directly comparable U.S. GAAP measures because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items, including integration and acquisition-related expenses, restructuring expenses, asset impairments, litigation settlements and other contingencies, such as changes to contingent consideration and certain other gains or losses, including for the fair value accounting for the CCPS in Biocon Biologics, as well as related income tax accounting, because certain of these items have not occurred, are out of the Company's control and/or cannot be reasonably predicted without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the relevant periods.

Viatris Inc. (NASDAQ: VTRS ) is a global healthcare company empowering people worldwide to live healthier at every stage of life. We provide access to medicines, advance sustainable operations, develop innovative solutions and leverage our collective expertise to connect more people to more products and services through our one-of-a-kind Global Healthcare Gateway®. Formed in November 2020 , Viatris brings together scientific, manufacturing and distribution expertise with proven regulatory, medical, and commercial capabilities to deliver high-quality medicines to patients in more than 165 countries and territories. Viatris' portfolio comprises more than 1,400 approved molecules across a wide range of therapeutic areas, spanning both non-communicable and infectious diseases, including globally recognized brands, complex generic and branded medicines and a variety of over-the-counter consumer products. With approximately 38,000 colleagues globally, Viatris is headquartered in the U.S., with global centers in Pittsburgh , Shanghai and Hyderabad, India . Learn more at viatris.com and investor.viatris.com , and connect with us on Twitter , LinkedIn , Instagram and YouTube .

Forward-Looking Statements

SOURCE Viatris Inc.