Core Insights - The iShares U.S. Pharmaceuticals ETF (IHE) is a passively managed fund launched on May 1, 2006, aimed at providing broad exposure to the Healthcare - Pharma segment of the equity market [1] - The Healthcare - Pharma sector is ranked 7th among the 16 Zacks sectors, placing it in the top 44% [2] Fund Overview - Sponsored by Blackrock, IHE has assets exceeding $578.73 million, categorizing it as an average-sized ETF [3] - The fund seeks to match the performance of the Dow Jones U.S. Select Pharmaceuticals Index, which is a free-float adjusted market capitalization-weighted index [4] Cost Structure - IHE has an annual operating expense ratio of 0.38%, making it one of the cheaper options in the ETF space [5] - The ETF offers a 12-month trailing dividend yield of 1.64% [5] Sector Exposure and Holdings - The ETF is fully allocated to the Healthcare sector, with approximately 100% of its portfolio [6] - Johnson & Johnson (JNJ) constitutes about 25.45% of total assets, followed by Eli Lilly (LLY) and Viatris Inc (VTRS), with the top 10 holdings accounting for approximately 78.07% of total assets [7] Performance Metrics - As of September 2, 2025, IHE has gained roughly 9.19% this year but is down about 0.74% over the past year [8] - The ETF has traded between $61 and $72.85 in the last 52 weeks, with a beta of 0.54 and a standard deviation of 15.83% over the trailing three-year period, indicating a higher risk profile [8] Alternatives - IHE carries a Zacks ETF Rank of 3 (Hold), suggesting it is a reasonable option for investors seeking exposure to the Healthcare ETFs area [9] - Other ETF options include Invesco Pharmaceuticals ETF (PJP) and VanEck Pharmaceutical ETF (PPH), with respective assets of $259.99 million and $620.64 million [10]

Core Viewpoint - The healthcare sector is showing initial signs of recovery after reaching a 30-year high in valuation discount relative to the S&P 500 index [1][2] Group 1: Market Performance - Since reaching a historical high on September 3, 2024, healthcare stocks have been in a "persistent downtrend," underperforming both in absolute terms and relative to the S&P 500 [1] - August is identified as a turning point for the sector, with healthcare stocks beginning to reverse their previous weak performance [1] Group 2: Economic Environment - The recovery is driven by a historically significant valuation gap and an economic backdrop characterized by GDP growth slowing to 1.5% or lower while inflation remains at 3% or higher, which historically favors the healthcare sector [1] - The dual effect of valuation discount and improved sentiment provides strong justification for including healthcare stocks in investment portfolios under the current economic conditions [2] Group 3: Investment Recommendations - Evercore ISI highlights several healthcare stocks with attractive valuations and sentiment, including Cencora (COR.US), BioMarin Pharmaceutical (BMRN.US), Cigna (CI.US), Cardinal Health (CAH.US), Humana (HUM.US), Incyte (INCY.US), LabCorp (LH.US), Pfizer (PFE.US), Quest Diagnostics (DGX.US), Teleflex (TFX.US), Tenet Healthcare (THC.US), Universal Health Services (UHS.US), and Viatris (VTRS.US) [2]

Group 1 - The healthcare sector is showing initial signs of recovery after reaching a 30-year high in valuation discount relative to the S&P 500 index [1][2] - Healthcare stocks have been in a "persistent downtrend" since reaching historical highs on September 3, 2024, missing out on market rebounds [1] - The recovery is driven by a historical valuation gap and a macroeconomic environment characterized by GDP growth slowing to 1.5% or lower while inflation remains at 3% or higher, which historically favors healthcare sector performance [1] Group 2 - The current price-to-earnings ratio of the overall market is 25.5 times, while healthcare stocks still present attractive investment options [2] - The potential recovery of healthcare stocks is described as part of "the fastest bear market rebound in history," indicating a larger bull market may extend until 2026 [2] - Evercore ISI recommends healthcare stocks with both valuation and sentiment appeal, including Cencora, BioMarin Pharmaceutical, Cigna, Cardinal Health, Humana, Incyte, Labcorp, Pfizer, Quest Diagnostics, Teleflex, Tenet Healthcare, Universal Health Services, and Viatris [2]

Company Overview - Viatris Inc. is a global healthcare company that bridges the gap between generics and brand-name pharmaceuticals, aiming to address healthcare needs worldwide [3] - The company provides access to high-quality medicines for approximately 1 billion patients annually, covering a wide range of health conditions from birth to end-of-life care [3] - Viatris has a diverse portfolio of medicines and a unique global supply chain designed to reach patients effectively [3] Leadership Changes - Andrew Enrietti has been appointed as the Chief Administrative and Transformation Officer, bringing over 20 years of experience, including 10 years at Viatris [1][2] - The CEO of Viatris, Scott A. Smith, expressed confidence in Enrietti's ability to drive the company's strategic review and long-term growth [2] - Enrietti emphasized the opportunity to shape the future of Viatris by integrating critical functions to support transformation and growth [2]

Core Insights - Viatris Inc. has received FDA approval for Iron Sucrose Injection, a generic intravenous iron replacement product for treating iron deficiency anemia (IDA) in patients with chronic kidney disease (CKD) [1][2] - The approval includes competitive generic therapy designation for specific strengths, allowing for expedited market entry and 180 days of exclusivity [3][21] - The launch of this first-to-market generic is expected to enhance treatment options for CKD patients and strengthen Viatris' generics portfolio [3][4] Company Developments - The FDA approval marks a significant milestone for Viatris, showcasing its technical and manufacturing capabilities in developing complex generic medicines [2][21] - Viatris' pipeline includes other complex injectables, such as ferric carboxymaltose injection, indicating a robust focus on difficult-to-manufacture products [2] - The company aims to increase sustainable access to critical therapies for patients with CKD and IDA through this new product [3] Market Context - Venofer®, the branded version of iron sucrose, had annual sales of approximately $515 million in the U.S. as of June 30, 2025, highlighting the market potential for the generic version [4] - The competitive generic therapy designation is granted for medications with inadequate generic competition, which may expedite the entry of Viatris' product into the market [3]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________to___________ Commission file number 00 ...

Core Insights - Viatris Inc. reported second-quarter 2025 adjusted earnings of 62 cents per share, exceeding the Zacks Consensus Estimate of 56 cents, but down from 69 cents per share in the same quarter last year [1][7] - Total revenues for the quarter were $3.58 billion, a decrease of 6% year over year, yet surpassing the Zacks Consensus Estimate of $3.5 billion [1][5] - The company's share price has declined 29.7% year to date, compared to an 8.6% decline in the industry [2] Revenue Breakdown - Sales from Developed Markets were $2.11 billion, down 4% on a divestiture-adjusted operational basis, but above the Zacks Consensus Estimate of $2.01 billion [5] - Emerging Markets generated sales of $555.1 million, up 1% on a divestiture-adjusted operational basis, beating the Zacks Consensus Estimate of $542 million [6] - Sales from Japan, Australia, and New Zealand (JANZ) totaled $305.7 million, down 11% on a divestiture-adjusted operational basis, missing the Zacks Consensus Estimate of $310 million [6] - Greater China sales reached $588.9 million, up 9% on a divestiture-adjusted operational basis, exceeding the Zacks Consensus Estimate of $546 million [6] Product Category Performance - Revenues from Brands decreased 3% to $2.3 billion, but increased 3% on a divestiture-adjusted operational basis, driven by strong performance in Greater China and Emerging Markets [7] - Lipitor sales rose to $388 million, Norvasc sales increased to $182.7 million, and Lyrica sales grew to $128.1 million compared to the previous year [8] - Generics revenues were $1.28 billion, down 10%, with a 9% decline on an operational change basis, attributed to the negative impact from the Indore facility [9] Financial Metrics - Adjusted gross margin was 56.3%, down from 58.4% in the prior year [11] - The company has returned over $630 million to shareholders in the year to date, including more than $350 million in share repurchases [11] - Viatris expects total share repurchases of $500 million to $650 million in 2025 [11] Guidance and Updates - The company reaffirmed its 2025 revenue guidance of $13.5 billion to $14 billion and raised its adjusted earnings per share forecast to a range of $2.16 to $2.30 [12] - Positive top-line results were announced from phase III studies evaluating MR-142 and MR-141 for treating vision impairments [13] - A phase III study for MR-139 did not meet its primary endpoint [14]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $3,580 million, down approximately 2% year-over-year, but operational revenue growth was approximately 3% when excluding the impact from Indoor [27][28] - Adjusted gross margin for the quarter was 56.6%, consistent with expectations, and operating expenses decreased due to planned cost-saving initiatives [31][32] - Free cash flow generated in the quarter was $167 million, with an adjusted figure of $241 million when excluding transaction-related costs [32] Business Line Data and Key Metrics Changes - In developed markets, brand performance helped offset the Indoor impact, with European business growing approximately 2% and brands portfolio growing approximately 3% [28] - North American business decreased 11% year-over-year, primarily due to Indoor impact and competition, while Emerging Markets saw a 1% increase driven by Turkey and Emerging Asia [29] - Greater China net sales grew 9%, benefiting from proactive patient choice and customer purchasing patterns [30] Market Data and Key Metrics Changes - The company serves approximately one billion patients worldwide each year, with a global supply chain supporting patient access [13] - The U.S. market is expected to see continued growth in generics, although moving additional manufacturing of non-complex generics to the U.S. is deemed difficult in the short term [14][15] - The company anticipates no material impact from proposed U.S. tariffs on its 2025 financial picture, while monitoring developments closely [12][35] Company Strategy and Development Direction - The company is focused on driving strong commercial execution, advancing its late-stage pipeline, and exploring strategic business development opportunities [6][11] - The enterprise-wide strategic review aims to position the company for sustainable growth in 2026 and beyond, with updates expected in the Q3 earnings call [11][54] - The company is committed to returning capital to shareholders through dividends and share buybacks, having returned over $630 million year-to-date [10][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term trajectory of the company, citing a strong business foundation and a maturing late-stage pipeline [15][16] - The company reiterated its 2025 financial guidance, expecting to be in the top half of the range for revenue and adjusted EPS [15][34] - Management acknowledged the challenges posed by tariffs but does not anticipate a material financial impact in 2025 [48][35] Other Important Information - Five of the six anticipated Phase III readouts have shown positive results, reinforcing the strength of the company's pipeline [7][18] - The company is making progress on remediation efforts at its Indoor facility, with plans to discuss reinspection with the FDA [11][69] - The company has received FDA approval for dorunavir tablets manufactured at its Nashik facility, indicating positive operational progress [12][70] Q&A Session Summary Question: Capital allocation priorities and growth expectations - Management emphasized a balanced approach to capital allocation, focusing on returning capital to shareholders while building a growth portfolio through strategic business development [40][41] Question: Impact of tariffs on revenue from India versus EU - Management stated that it is monitoring the situation closely and does not anticipate a material financial impact from tariffs in 2025 [48] Question: Performance of the China business - The China business saw a 9% operational growth, with expectations for moderate growth in the future, driven by strong brand equity and proactive patient demand [55][56] Question: Contribution from new products in developed markets - Management expects to generate approximately $450 million to $550 million from new product revenue, with a back-half weighting based on approval and launch timing [61][62] Question: Commercial strategy for meloxicam - The company is in the midst of launch planning for meloxicam, focusing on market research and positioning, with expectations for significant opportunity in the acute pain market [66][67]

Core Viewpoint - Viatris reported quarterly earnings of $0.62 per share, exceeding the Zacks Consensus Estimate of $0.56 per share, but down from $0.69 per share a year ago, indicating a mixed performance in earnings despite a positive surprise [1][2]. Financial Performance - The company achieved revenues of $3.58 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.40%, although this represents a decline from $3.8 billion in the same quarter last year [2]. - Over the last four quarters, Viatris has exceeded consensus EPS estimates three times and has also topped consensus revenue estimates three times [2]. Stock Performance - Viatris shares have declined approximately 29.7% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.63 on revenues of $3.64 billion, while for the current fiscal year, the estimate is $2.25 on revenues of $13.85 billion [7]. - The outlook for the Medical Services industry, where Viatris operates, is favorable as it ranks in the top 40% of over 250 Zacks industries, indicating potential for better performance compared to lower-ranked industries [8].

Financial Performance - Q2 2025 total revenues were $3582 million, a decrease of 6% compared to Q2 2024[39] - Adjusted EBITDA for Q2 2025 was $1079 million, an 11% decrease compared to Q2 2024[39] - Adjusted EPS for Q2 2025 was $062, a 10% decrease compared to Q2 2024[39] - Free cash flow for Q2 2025 was $167 million, or $241 million excluding transaction-related costs[39, 40] Impact of Indore Facility - The estimated negative impact on 2025 total revenues due to the Indore facility is approximately $500 million, with an estimated $385 million impact on adjusted EBITDA[2, 58] - The Q2 2025 Indore impact to earnings from operations and adjusted EBITDA is estimated to be approximately $110 million[58, 60] - Estimated 2025 net sales impact by region due to the Indore facility: North America ~$300 million, Europe ~$75 million, and Emerging Markets ~$125 million[2, 58] Financial Guidance - The company reaffirms its 2025 financial guidance, with total revenues expected to be between $135 billion and $140 billion[2, 63] - Adjusted EBITDA is expected to be between $389 billion and $419 billion, and adjusted EPS is expected to be between $216 and $230[2, 63] - The company expects to complete share repurchases totaling between $500 million and $650 million in 2025[2] Business Segment Performance - Developed Markets net sales were $2119 million, a decrease of 9% compared to Q2 2024[46] - Emerging Markets net sales were $555 million, a decrease of 4% compared to Q2 2024[49] - Greater China net sales were $589 million, an increase of 9% compared to Q2 2024[55]