Viatris (VTRS) Beats on Q3 Earnings & Sales, Tweaks View
Viatris Inc VTRS reported adjusted earnings of 99 cents per share in the third quarter of 2021, beating the Zacks Consensus Estimate of 86 cents but decreasing from $1.32 reported in the year-ago quarter.
The company was formed in November 2020 through the combination of Mylan and Upjohn. Total revenues came in at $4.54 billion, growing 52.6% year over year as a result of the merger. The top line beat the Zacks Consensus Estimate of $4.4 billion.
Viatris’ stock has lost 26.8% in the year so far compared with the industry’s decline of 39%.
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Quarter in Detail
Revenues include sales and other revenues. Sales of $4.52 billion jumped 53% from the year-ago quarter. Sales were down 4% compared with combined adjusted results in the year-ago quarter.
The company reports results in four segments — Developed Markets, Emerging Markets, JANZ (Japan, Australia and New Zealand), and Greater China.
Developed market sales came in at $2.6 billion, up 23% from the year-ago quarter.
Sales from Emerging Markets came in at $792.5 million, jumping 68% year over year.
JANZ generated sales of $505.3 million, surging 79%.
Sales from Greater China came in at $566.8 million. Sales recorded in the year-ago quarter were $31.5 million.
On the basis of product category, Brands performed better than expectations, driven by products such as Lipitor, Influvac, Viagra, and EpiPen and generated revenues of $2.8 billion. Complex generics and biosimilars performed in line with expectations, with 14% growth in biosimilars offset by anticipated competition in select complex generics products. Generics, which include diversified product forms such as extended-release oral solids, injectables, transdermals, and topicals, performed in line with management expectations, driven primarily by the positive impact of partial COVID-19 recovery and related products, offset by expected competition.
Viatris generated $158 million in new product revenues (revenues from products launched in 2021) and is on track to record $690 million in consolidated new product revenues in 2021.
Adjusted gross margin increased to 60% from 54.8% in the year-ago quarter.
2021 Guidance Update
Revenues are now projected between $17.7 billion and $17.9 billion compared with the earlier projection of $17.5-$17.9 billion.
During the fourth quarter of 2020, Viatris announced a widespread global restructuring program in order to achieve synergies of $1 billion. The restructuring initiative incorporates and expands on the restructuring program announced by Mylan N.V. earlier in 2020, as part of its business transformation efforts. The company expects to optimize its commercial capabilities and enabling functions, and close, downsize or divest up to 13 manufacturing facilities globally. The company remains on track to realize approximately $500 million of cost synergies this year and to achieve at least $1 billion of cost synergies by 2023.
Dividend Announcement
Viatris declared a quarterly dividend of 11 cents per share payable on Dec 16, 2021. The company paid down $1.9 billion of debt in the first nine months of 2021.
Viatris Inc. Price, Consensus and EPS Surprise
Viatris Inc. price-consensus-eps-surprise-chart | Viatris Inc. Quote
Our Take
Viatris reported better-than-expected results in the third quarter. Management also upped the lower end of its revenue guidance.
New products are likely to boost sales in the quarters ahead and the ongoing restructuring program should help the bottom line.
Zacks Rank & Stocks to Consider
Viatris currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the healthcare sector are Regeneron Pharmaceuticals REGN, Alkermes ALKS, and Amicus Therapeutics FOLD. While Regeneron and Alkermes sport a Zacks Rank #1 (Strong Buy), Amicus carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Regeneron Pharmaceuticals have moved up $1.65 for 2021 in the past seven days. The stock is up 26.6% year to date.
Earnings estimates for Alkermes have moved up 7 cents for 2021 in the past 30 days. The stock is up 52% year to date.
Loss estimates for Amicus have narrowed by 2 cents in the past 90 days.
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