Core Viewpoint - Viatris (NASDAQ: VTRS) experienced a 2.93% increase in stock price on Wednesday, reaching $9.84, after a significant decline over the previous seven trading sessions [1] Summary by Relevant Sections - Stock Performance - Over the past seven trading days, VTRS stock declined approximately 9% [1] - Notable daily losses included a 3.61% drop on September 15 and a 2.06% slide on September 12 [1]

Group 1 - Viatris Inc. is a global healthcare company formed from the merger of Mylan and Pfizer's Upjohn division in 2020, operating in over 165 countries and focusing on both generics and specialty pharmaceuticals [2] - The FDA approval of Viatris's first generic iron sucrose injection, a version of Venofer, is a significant development, with annual U.S. sales of approximately $515 million, marking an entry into the intravenous iron market [3] - Positive late-stage trial results for several pipeline assets, including fast-acting meloxicam for acute pain and the next-generation birth control patch XULANE LO, support the company's growth strategy and upcoming product launches through 2026 [4] Group 2 - Viatris's strategic emphasis on complex generics and specialty products indicates a shift from a primarily generic-focused business to a more innovation-driven company, highlighting the resilience of its diversified portfolio [5]

Core Viewpoint - The healthcare industry is currently facing significant challenges, with large-cap pharmaceutical companies particularly affected, leading to a poor performance compared to the market [2][3]. Group 1: Industry Challenges - The healthcare sector has only outperformed the market during downturns over the last decade, indicating a troubling trend [2]. - The current dynamics in the healthcare industry are described as the worst experienced in decades, with managed care and pharmaceuticals identified as the main contributors to market pressures [3]. Group 2: Investment Opportunities - A methodology was employed to identify cheap healthcare stocks, focusing on companies with a market capitalization above $2 billion and a forward P/E ratio below 15 [5]. - The article lists 12 healthcare stocks deemed attractive for investment, based on their valuation metrics and growth potential [6]. Group 3: Company Highlights - **Bausch Health Companies Inc. (NYSE:BHC)**: - Forward P/E Ratio: 1.45, recognized for strategic acquisitions and pipeline developments, particularly in hepatology [7]. - Recent acquisition of DURECT Corporation valued at $63 million upfront, with potential milestone payments of up to $350 million, enhancing its portfolio for alcoholic hepatitis [8]. - Key pipeline assets include larsucosterol and rifaximin SSD, with significant market potential in addressing hospitalizations for alcoholic hepatitis [9][10]. - **Organon & Co. (NYSE:OGN)**: - Forward P/E Ratio: 2.73, focused on women's health and biosimilars, expanding its market presence since spinning off from Merck [11]. - Recent FDA approvals for biosimilars BILDYOS and BILPREVDA, aimed at improving access to osteoporosis and bone cancer treatments [12]. - The company is pivoting towards biosimilars as a growth engine while maintaining focus on women's health and dermatology [13]. - **Viatris Inc. (NASDAQ:VTRS)**: - Forward P/E Ratio: 4.40, formed from the merger of Mylan and Pfizer's Upjohn division, focusing on generics and specialty pharmaceuticals [14]. - FDA approval of a generic iron sucrose injection, reflecting a strategic entry into the intravenous iron market with significant sales potential [15]. - Positive late-stage trial results for several pipeline assets, reinforcing the company's growth strategy and upcoming product launches [16][17].

Group 1 - Viatris Inc shares crossed below their 200-day moving average of $9.98, trading as low as $9.95 per share, reflecting a decline of approximately 1.9% on the day [2] - The 52-week range for VTRS shares is between a low of $6.85 and a high of $13.55, with the last trade recorded at $9.96 [2] - The data regarding VTRS's moving average was sourced from TechnicalAnalysisChannel.com [2]

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]

General Information [Filing Details](index=1&type=section&id=Filing%20Details) Viatris Inc. filed a Quarterly Report on Form 10-Q for Q2 2025, identifying as a large accelerated filer with common stock traded on NASDAQ under VTRS - **Filing Type**: Quarterly Report on Form 10-Q for the period ended June 30, 2025[2](index=2&type=chunk) - **Registrant**: Viatris Inc. (Commission file number 001-39695)[2](index=2&type=chunk) Registrant Status | Status | Indicator | | :---------------------- | :-------- | | Large accelerated filer | ☑ | Common Stock Information (as of August 4, 2025) | Metric | Value | | :-------------------------------- | :------------ | | Shares Outstanding (par value $0.01 per share) | 1,165,872,127 | Index to Form 10-Q [Report Structure](index=2&type=section&id=Report%20Structure) The Form 10-Q is structured into Part I (Financial Information) and Part II (Other Information), covering financial statements, management analysis, and legal/risk disclosures - **Part I** includes Condensed Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations[7](index=7&type=chunk) - **Part II** covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities, Other Information, and Exhibits[7](index=7&type=chunk) Glossary of Defined Terms [Key Definitions](index=3&type=section&id=Key%20Definitions) This section defines key financial measures, regulatory terms, business segments, and transaction-specific terms used throughout the Form 10-Q - The glossary defines key financial terms including **Adjusted EBITDA** and **Adjusted EPS**[10](index=10&type=chunk) - It clarifies company-specific transactions such as the **Biocon Biologics Transaction** and the **Idorsia Transaction**[10](index=10&type=chunk)[11](index=11&type=chunk) - Key business segments defined include **Developed Markets**, **Emerging Markets**, **Greater China**, and **JANZ**[10](index=10&type=chunk)[11](index=11&type=chunk) PART I — FINANCIAL INFORMATION [ITEM 1. Condensed Consolidated Financial Statements (unaudited)](index=6&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents Viatris Inc.'s unaudited condensed consolidated financial statements for Q2 2025 and 2024, including operations, comprehensive earnings, balance sheets, equity, cash flows, and explanatory notes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Viatris Inc. reported a net loss of **$4.6 million** for Q2 2025, improving from the prior year, but a **$3.05 billion** net loss for H1 2025 due to goodwill impairment Condensed Consolidated Statements of Operations (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $3,569.0 | $3,785.9 | $6,812.2 | $7,439.4 | | Total revenues | $3,582.1 | $3,796.6 | $6,836.4 | $7,460.0 | | Gross profit | $1,332.9 | $1,445.4 | $2,494.1 | $2,949.4 | | Earnings (loss) from operations | $233.0 | $(239.9) | $(2,649.2) | $(36.0) | | Net loss | $(4.6) | $(326.4) | $(3,046.6) | $(212.5) | | Basic loss per share | $0.00 | $(0.27) | $(2.58) | $(0.18) | | Diluted loss per share | $0.00 | $(0.27) | $(2.58) | $(0.18) | [Condensed Consolidated Statements of Comprehensive Earnings (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Earnings%20(Loss)) Viatris reported **$201.9 million** comprehensive earnings for Q2 2025, a significant improvement, but a **$2.50 billion** comprehensive loss for H1 2025, both influenced by foreign currency Condensed Consolidated Statements of Comprehensive Earnings (Loss) (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(4.6) | $(326.4) | $(3,046.6) | $(212.5) | | Foreign currency translation adjustment | $507.0 | $(89.7) | $1,005.8 | $(432.2) | | Other comprehensive earnings (loss), net of tax | $206.5 | $(34.2) | $548.5 | $(227.8) | | Comprehensive earnings (loss) | $201.9 | $(360.6) | $(2,498.1) | $(440.3) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Viatris Inc.'s total assets decreased to **$38.41 billion** as of June 30, 2025, primarily due to reduced goodwill, while total equity declined to **$15.57 billion** Condensed Consolidated Balance Sheets (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents | $566.4 | $734.8 | | Total current assets | $9,774.6 | $9,520.7 | | Intangible assets, net | $16,323.8 | $17,070.9 | | Goodwill | $6,748.3 | $9,133.3 | | Total assets | $38,411.5 | $41,500.9 | | Total current liabilities | $7,133.4 | $5,779.4 | | Long-term debt | $12,791.6 | $14,038.9 | | Total liabilities | $22,841.0 | $22,865.4 | | Total equity | $15,570.5 | $18,635.5 | [Condensed Consolidated Statements of Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Viatris Inc.'s total equity decreased to **$15.57 billion** by June 30, 2025, driven by a **$3.05 billion** net loss and **$351.5 million** in share repurchases Key Changes in Equity (Six Months Ended June 30, 2025, in millions) | Item | Amount | | :-------------------------------- | :------- | | Balance at December 31, 2024 | $18,635.5 | | Net loss | $(3,046.6) | | Other comprehensive earnings, net of tax | $548.5 | | Share-based compensation expense | $92.3 | | Common stock repurchase | $(351.5) | | Cash dividends declared | $(292.2) | | Balance at June 30, 2025 | $15,570.5 | Key Changes in Equity (Six Months Ended June 30, 2024, in millions) | Item | Amount | | :-------------------------------- | :------- | | Balance at December 31, 2023 | $20,467.4 | | Net loss | $(212.5) | | Other comprehensive loss, net of tax | $(227.8) | | Share-based compensation expense | $81.4 | | Common stock repurchase | $(252.5) | | Cash dividends declared | $(293.3) | | Balance at June 30, 2024 | $19,520.0 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to **$755.2 million** in H1 2025, investing activities shifted to a **$117.6 million** net use, and financing cash use decreased to **$829.4 million** Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in millions) | Activity | 2025 | 2024 | | :-------------------------------------- | :------- | :------- | | Net cash provided by operating activities | $755.2 | $993.7 | | Net cash (used in) provided by investing activities | $(117.6) | $221.5 | | Net cash used in financing activities | $(829.4) | $(1,273.5) | | Net decrease in cash, cash equivalents and restricted cash | $(168.3) | $(75.1) | | Cash, cash equivalents and restricted cash — end of period | $567.8 | $918.5 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail Viatris' accounting policies, revenue, acquisitions, divestitures, share-based compensation, balance sheet components, goodwill, financial instruments, debt, segment information, and litigation [Note 1. General](index=12&type=section&id=Note%201.%20General) Interim financial statements adhere to U.S. GAAP and SEC rules, with reclassifications made to conform prior period presentations, including goodwill impairment charges - Interim financial statements are prepared in accordance with **U.S. GAAP** and **SEC rules** for Form 10-Q[27](index=27&type=chunk) - **Goodwill impairment charges** are now presented separately in the condensed consolidated statements of operations and cash flows[30](index=30&type=chunk) [Note 2. Revenue Recognition and Accounts Receivable](index=12&type=section&id=Note%202.%20Revenue%20Recognition%20and%20Accounts%20Receivable) Viatris recognizes revenue net of variable consideration; Q2 2025 net sales were **$3.57 billion**, with **Brands** contributing **$2.28 billion** and **Generics $1.28 billion** - Revenue is recognized under **ASC 606**, net of variable consideration[31](index=31&type=chunk) Net Sales by Product Category and Segment (Three Months Ended June 30, 2025, in millions) | Product Category | Developed Markets | Greater China | JANZ | Emerging Markets | Total | | :--------------- | :---------------- | :------------ | :--- | :--------------- | :------ | | Brands | $1,121.4 | $586.5 | $160.5 | $416.1 | $2,284.5 | | Generics | $997.9 | $2.4 | $145.2 | $139.0 | $1,284.5 | | Total Viatris | $2,119.3 | $588.9 | $305.7 | $555.1 | $3,569.0 | Net Sales by Product Category and Segment (Six Months Ended June 30, 2025, in millions) | Product Category | Developed Markets | Greater China | JANZ | Emerging Markets | Total | | :--------------- | :---------------- | :------------ | :--- | :--------------- | :------ | | Brands | $2,141.2 | $1,139.3 | $302.3 | $818.6 | $4,401.4 | | Generics | $1,869.8 | $5.1 | $279.5 | $256.4 | $2,410.8 | | Total Viatris | $4,011.0 | $1,144.4 | $581.8 | $1,075.0 | $6,812.2 | Consolidated Net Sales for Select Key Products (Three Months Ended June 30, in millions) | Product | 2025 | 2024 | | :---------------------- | :------- | :------- | | Lipitor® | $387.9 | $348.4 | | Norvasc® | $182.7 | $161.9 | | EpiPen® Auto-Injectors | $136.8 | $115.5 | | Lyrica® | $128.1 | $124.3 | | Viagra® | $100.3 | $106.1 | | Creon® | $91.4 | $78.2 | | Celebrex® | $70.0 | $72.2 | | Effexor® | $63.1 | $62.7 | | Zoloft® | $61.1 | $58.9 | | Xalabrands | $40.7 | $45.6 | | Yupelri® | $66.6 | $54.5 | | Dymista® | $48.4 | $55.0 | | Amitiza® | $41.6 | $36.9 | | Xanax® | $33.9 | $35.4 | Reconciliation of Gross Sales to Net Sales (Six Months Ended June 30, in millions) | Category | 2025 | 2024 | | :----------------------------------------- | :--------- | :--------- | | Gross sales | $11,545.0 | $12,558.5 | | Total gross to net adjustments | $(4,732.8) | $(5,119.1) | | Net sales | $6,812.2 | $7,439.4 | - The Company derecognized **$123.0 million** of accounts receivable as of June 30, 2025, under factoring arrangements[40](index=40&type=chunk) [Note 3. Recent Accounting Pronouncements](index=15&type=section&id=Note%203.%20Recent%20Accounting%20Pronouncements) The SEC's climate-related disclosure rules, though stayed, would impact fiscal year 2025; no other significant accounting standard changes were noted from the 2024 Form 10-K - The **SEC's Final Rules on climate-related disclosures** have been stayed pending litigation[42](index=42&type=chunk) - The **SEC** withdrew its defense of the Final Rules in pending litigation on March 27, 2025[42](index=42&type=chunk) - No other significant changes in new accounting standards were disclosed from Viatris' 2024 Form 10-K[43](index=43&type=chunk) [Note 4. Acquisitions and Other Transactions](index=15&type=section&id=Note%204.%20Acquisitions%20and%20Other%20Transactions) Viatris acquired global rights to selatogrel and cenerimod from Idorsia for **$350 million** upfront, with a 2025 amendment reducing contingent milestones by **$250 million** in exchange for assuming **$100 million** in development costs - On March 15, 2024, Viatris acquired global development and commercialization rights to **selatogrel** and **cenerimod** from Idorsia for an upfront payment of **$350 million**[44](index=44&type=chunk) Idorsia Acquisition Purchase Price Allocation (in millions) | Asset/Liability | Amount | | :-------------------- | :------- | | Current assets | $2.1 | | IPR&D | $675.0 | | Goodwill | $19.5 | | Total assets acquired | $696.6 | | Current liabilities | $1.6 | | Net assets acquired | $695.0 | - An amendment on February 25, 2025, reduced contingent milestone payments by **$250 million** and transferred additional territory rights and personnel to Viatris, in exchange for assuming **$100 million** of Idorsia's development cost obligation[50](index=50&type=chunk) [Note 5. Divestitures](index=16&type=section&id=Note%205.%20Divestitures) Viatris completed major divestitures by end of 2024, recording **$80.7 million** in additional pre-tax charges in H1 2025 due to increased transaction costs - Viatris substantially completed divestitures of its **OTC Business**, **women's healthcare business**, and **API business** by the end of 2024[51](index=51&type=chunk) - Additional pre-tax charges of **$80.7 million** were recorded in H1 2025 for divestitures, primarily due to increased transaction costs[52](index=52&type=chunk) TSA Income from Divestitures (in millions) | Period | 2025 | 2024 | | :---------------------- | :------- | :------- | | Three Months Ended June 30, | $12.4 | $6.0 | | Six Months Ended June 30, | $29.8 | $19.5 | [Note 6. Share-Based Incentive Plan](index=17&type=section&id=Note%206.%20Share-Based%20Incentive%20Plan) Viatris' 2020 Incentive Plan was amended to increase authorized shares by **49 million**; **$236.2 million** in unrecognized compensation expense remains as of June 30, 2025 - The **2020 Incentive Plan** was amended on December 6, 2024, to increase authorized shares by **49,000,000**[55](index=55&type=chunk) Stock Awards Activity (December 31, 2024 to June 30, 2025) | Metric | Number of Shares Under Stock Awards | Weighted Average Exercise Price per Share | | :-------------------------- | :---------------------------------- | :-------------------------------------- | | Outstanding at Dec 31, 2024 | 3,350,786 | $35.94 | | Exercised | (12,291) | $6.51 | | Forfeited | (515,096) | $37.04 | | Outstanding at June 30, 2025 | 2,823,399 | $35.86 | - As of June 30, 2025, Viatris had **$236.2 million** of unrecognized compensation expense related to stock-based awards, with a weighted average vesting period of **1.7 years**[58](index=58&type=chunk) [Note 7. Pensions and Other Postretirement Benefits](index=18&type=section&id=Note%207.%20Pensions%20and%20Other%20Postretirement%20Benefits) Viatris' global pension and postretirement plans incurred an **$8.0 million** net periodic benefit cost in H1 2025, with **$112.2 million** in benefit payments and **$68.8 million** in contributions expected in 2025 Net Periodic Benefit Cost (in millions) | Component | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $7.4 | $7.8 | $14.9 | $15.7 | | Interest cost | $16.3 | $16.7 | $32.5 | $33.3 | | Expected return on plan assets | $(16.8) | $(16.9) | $(33.6) | $(33.8) | | Net periodic benefit cost | $4.0 | $4.0 | $8.0 | $7.8 | - The Company expects to make total benefit payments of approximately **$112.2 million** from pension and other postretirement benefit plans in 2025[61](index=61&type=chunk) - The Company anticipates making contributions to pension and other postretirement benefit plans of approximately **$68.8 million** in 2025[61](index=61&type=chunk) [Note 8. Balance Sheet Components](index=19&type=section&id=Note%208.%20Balance%20Sheet%20Components) This note details balance sheet components, showing inventories increased to **$4.26 billion** by June 30, 2025, and other current liabilities rose due to financial instrument fair value Cash and Restricted Cash (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $566.4 | $734.8 | | Restricted cash | $1.4 | $1.3 | | Cash, cash equivalents and restricted cash | $567.8 | $736.1 | Inventories (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :-------------- | :---------------- | | Raw materials | $1,547.4 | $1,345.9 | | Work in process | $531.7 | $527.3 | | Finished goods | $2,185.2 | $1,980.9 | | Inventories | $4,264.3 | $3,854.1 | Other Current Liabilities (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :-------------- | :---------------- | | Accrued sales allowances | $1,046.3 | $989.4 | | Payroll and employee benefit liabilities | $567.8 | $729.3 | | Legal and professional accruals | $540.8 | $472.8 | | Fair value of financial instruments | $377.0 | $125.8 | | Other current liabilities | $3,670.1 | $3,724.7 | [Note 9. Loss per Share](index=20&type=section&id=Note%209.%20Loss%20per%20Share) Viatris reported a basic and diluted loss per share of **$0.00** for Q2 2025 and **$(2.58)** for H1 2025, while continuing its **$2.0 billion** share repurchase program Loss per Share Attributable to Viatris Inc. Shareholders (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to Viatris Inc. common shareholders | $(4.6) | $(326.4) | $(3,046.6) | $(212.5) | | Weighted average shares outstanding (basic) | 1,173.0 | 1,191.1 | 1,182.7 | 1,193.1 | | Basic loss per share | $0.00 | $(0.27) | $(2.58) | $(0.18) | | Diluted loss per share | $0.00 | $(0.27) | $(2.58) | $(0.18) | - The Board of Directors declared a quarterly cash dividend of **$0.12 per share**[72](index=72&type=chunk) - The Company's share repurchase program authorizes up to **$2.0 billion** in common stock repurchases, with **$850.4 million** (79.3 million shares) repurchased as of June 30, 2025[73](index=73&type=chunk) [Note 10. Goodwill and Intangible Assets](index=22&type=section&id=Note%2010.%20Goodwill%20and%20Intangible%20Assets) Viatris recorded a **$2.94 billion** goodwill impairment charge in Q1 2025, impacting several segments, while Greater China's fair value exceeded its carrying value by **$322.0 million** Goodwill Carrying Amount Changes (Six Months Ended June 30, 2025, in millions) | Segment | Balance at Dec 31, 2024 | Impairment | Foreign Currency Translation | Balance at June 30, 2025 | | :---------------- | :---------------------- | :----------- | :--------------------------- | :----------------------- | | Developed Markets | $6,752.9 | $(2,261.0) | $527.3 | $5,019.2 | | Greater China | $921.5 | — | $6.3 | $927.8 | | JANZ | $295.1 | $(300.8) | $5.7 | — | | Emerging Markets | $1,163.8 | $(375.0) | $12.5 | $801.3 | | Total | $9,133.3 | $(2,936.8) | $551.8 | $6,748.3 | - A **$2.94 billion** goodwill impairment charge was recorded in Q1 2025, triggered by a sharp decline in share price and increased geopolitical/economic uncertainty[74](index=74&type=chunk)[77](index=77&type=chunk)[80](index=80&type=chunk) - The **Greater China** reporting unit's estimated fair value exceeded its carrying value by approximately **$322.0 million** (5.8%) as of March 31, 2025[85](index=85&type=chunk) Intangible Assets, Net (in millions) | Category | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | | :-------------------------------- | :----------------------------- | :------------------------------- | | Product rights, licenses and other | $15,521.9 | $16,256.7 | | In-process research and development | $801.9 | $814.2 | | Total | $16,323.8 | $17,070.9 | Intangible Asset Amortization Expense (in millions) | Period | 2025 | 2024 | | :----------------------------------------------------------------- | :------- | :------- | | Three Months Ended June 30, Total intangible asset amortization expense | $585.5 | $699.2 | | Six Months Ended June 30, Total intangible asset amortization expense | $1,156.7 | $1,300.2 | [Note 11. Financial Instruments and Risk Management](index=25&type=section&id=Note%2011.%20Financial%20Instruments%20and%20Risk%20Management) Viatris manages foreign currency and interest rate risks with derivatives; contingent consideration liability totaled **$367.2 million** at June 30, 2025, with an Idorsia Transaction fair value adjustment gain - Viatris uses **foreign exchange forward contracts** and **interest rate swaps** to mitigate foreign currency and interest rate risks[92](index=92&type=chunk)[101](index=101&type=chunk) - The Company designated certain **Euro** and **Yen** borrowings as a hedge of investments in Euro-functional and Yen-functional currency subsidiaries to manage foreign currency translation risk[95](index=95&type=chunk) Fair Value of Derivative Instruments (June 30, 2025, in millions) | Category | Asset Derivatives Fair Value | Liability Derivatives Fair Value | | :------------------------------------ | :--------------------------- | :----------------------------- | | Total derivatives designated as hedges | $4.0 | $81.9 | | Total derivatives not designated as hedges | $138.4 | $301.0 | | Total derivatives | $142.4 | $382.9 | - **Contingent consideration liability** totaled **$367.2 million** at June 30, 2025, including **$288.0 million** for the Idorsia Transaction and **$77.5 million** for the Respiratory Delivery Platform[108](index=108&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - A **fair value adjustment gain** related to the Idorsia Transaction contingent consideration liability was recorded in H1 2025 due to amended agreement terms[110](index=110&type=chunk) [Note 12. Debt](index=31&type=section&id=Note%2012.%20Debt) Viatris has a **$600 million** Receivables Facility with no outstanding borrowings; the fair value of outstanding notes was **$11.81 billion**, and mandatory long-term debt repayments total **$14.012 billion** - The Company has a **$600 million Receivables Facility** expiring April 2028, with no outstanding borrowings as of June 30, 2025[115](index=115&type=chunk)[320](index=320&type=chunk) Long-Term Debt Summary (June 30, 2025, in millions) | Category | Amount | | :------------------------------------------ | :----------- | | Current portion of long-term debt | $1,673.1 | | Non-current portion of long-term debt | $12,791.6 | | Total long-term debt | $14,464.7 | - The aggregate fair value of the Company's outstanding notes was approximately **$11.81 billion** at June 30, 2025[119](index=119&type=chunk) Mandatory Minimum Repayments on Long-Term Debt (as of June 30, 2025, in millions) | Year | Total | | :----- | :------ | | 2025 | $0 | | 2026 | $1,953 | | 2027 | $1,752 | | 2028 | $1,634 | | 2029 | $0 | | Thereafter | $8,673 | | Total | $14,012 | [Note 13. Comprehensive Loss](index=33&type=section&id=Note%2013.%20Comprehensive%20Loss) Viatris Inc.'s accumulated other comprehensive loss improved to **$(2.66 billion)** by June 30, 2025, driven by a favorable foreign currency translation adjustment Accumulated Other Comprehensive Loss (in millions) | Component | June 30, 2025 | December 31, 2024 | | :----------------------------------------------------------------- | :-------------- | :---------------- | | Net unrealized loss on available-for-sale fixed income securities, net of tax | $(0.6) | $(1.2) | | Net unrecognized gain and prior service cost related to defined benefit plans, net of tax | $253.8 | $254.2 | | Net unrecognized loss on derivatives in cash flow hedging relationships, net of tax | $(12.8) | $32.3 | | Net unrecognized gain on derivatives in net investment hedging relationships, net of tax | $80.2 | $492.6 | | Foreign currency translation adjustment | $(2,985.0) | $(3,990.8) | | Total Accumulated other comprehensive loss | $(2,664.4) | $(3,212.9) | - Other comprehensive earnings before reclassifications for H1 2025 included a **$1.01 billion** foreign currency translation adjustment[125](index=125&type=chunk) [Note 14. Segment Information](index=37&type=section&id=Note%2014.%20Segment%20Information) Viatris operates four segments; H1 2025 segment profitability was **$3.02 billion**, resulting in a **$(2.65 billion)** consolidated loss from operations after unallocated costs and impairment - Viatris has four reportable segments: **Developed Markets**, **Greater China**, **JANZ**, and **Emerging Markets**[130](index=130&type=chunk) Segment Profitability (Six Months Ended June 30, 2025, in millions) | Segment | Net Sales | Total Revenues | Segment Profit | | :---------------- | :-------- | :------------- | :------------- | | Developed Markets | $4,011.0 | $4,028.2 | $1,613.6 | | Greater China | $1,144.4 | $1,144.4 | $786.5 | | JANZ | $581.8 | $583.8 | $145.9 | | Emerging Markets | $1,075.0 | $1,080.0 | $474.1 | | Total Reportable Segments | $6,812.2 | $6,836.4 | $3,020.1 | Reconciliation of Segment Profit to Loss from Operations (Six Months Ended June 30, 2025, in millions) | Item | Amount | | :------------------------------------------------- | :----------- | | Segment profit | $3,020.1 | | Intangible asset amortization expense | $(1,154.5) | | Impairment of goodwill | $(2,936.8) | | Research and development | $(440.8) | | Acquired IPR&D | $(10.0) | | Litigation settlements and other contingencies, net | $121.1 | | Transaction related and other special items | $(469.3) | | Corporate and other unallocated | $(776.8) | | Loss from operations | $(2,649.2) | [Note 15. Licensing and Other Partner Agreements](index=41&type=section&id=Note%2015.%20Licensing%20and%20Other%20Partner%20Agreements) Viatris has **$398 million** in potential unaccrued development milestones; the FDA's Q1 2024 Complete Response Letter for GA Depot led to a **$184.6 million** asset impairment - Potential maximum development milestones not accrued totaled approximately **$398 million** at June 30, 2025, with **$24 million** estimated payable through 2025[141](index=141&type=chunk) - **Mapi** is eligible for up to **$90.0 million** in regulatory approval and commercial launch milestone payments for GA Depot[142](index=142&type=chunk) - In Q1 2024, **Mapi** received a **Complete Response Letter** from the FDA for GA Depot 40 mg, resulting in a **$184.6 million** impairment of Viatris' related equity investment and prepaid assets in Q4 2024[143](index=143&type=chunk) [Note 16. Income Taxes](index=42&type=section&id=Note%2016.%20Income%20Taxes) The U.S. enacted the **OBBBA** on July 4, 2025, with unknown impacts; Viatris anticipates no 15% CAMT in 2025, and Pillar Two Rules were immaterial, with a **$263.6 million** tax reserve - The U.S. enacted the **One Big Beautiful Bill Act (OBBBA)** on July 4, 2025, with impacts on tax rate and deferred tax assets not yet determinable[146](index=146&type=chunk) - Viatris does not anticipate being subject to the **15% U.S. corporate alternative minimum tax (CAMT)** in 2025[147](index=147&type=chunk) - The impact of the **Pillar Two Global Anti-Base Erosion Rules** on Viatris' H1 2025 results was not material[148](index=148&type=chunk) - The Company has a net reserve for uncertain tax positions of **$263.6 million** at June 30, 2025, related to international audits[156](index=156&type=chunk) [Note 17. Litigation](index=44&type=section&id=Note%2017.%20Litigation) Viatris faces complex litigation including EpiPen, drug pricing, opioids, and intellectual property, with accruals of **$25.0 million** for EpiPen and **$335 million** for opioid claims - Viatris has a total accrual of approximately **$25.0 million** related to **EpiPen® Auto-Injector** litigation matters at June 30, 2025[169](index=169&type=chunk) - The Company reached a nationwide settlement framework for opioid-related claims, agreeing to pay up to **$335 million** over nine years, with approximately **$335 million** accrued at June 30, 2025[187](index=187&type=chunk)[189](index=189&type=chunk) - Viatris has accrued approximately **€12.2 million** as of June 30, 2025, related to the **Citalopram EU competition rules violation case**[192](index=192&type=chunk) - The Company has accrued approximately **$66.8 million** as of June 30, 2025, for its product liability matters[197](index=197&type=chunk) - Viatris has approximately **$5.3 million** accrued related to its intellectual property matters at June 30, 2025[210](index=210&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Viatris Inc.'s financial performance, condition, and liquidity, covering operational results, market factors, recent developments, and non-GAAP reconciliations [Company Overview](index=54&type=section&id=Company%20Overview) Viatris is a global healthcare company operating in over 165 countries with **32,000 employees**, **1,400+ molecules**, and **26 manufacturing sites**, structured into four reportable segments - Viatris is a global healthcare company supplying high-quality medicines to approximately **1 billion patients annually**[217](index=217&type=chunk) - The Company operates in more than **165 countries** with approximately **32,000 employees**, **26 manufacturing sites**, and over **1,400 approved molecules**[218](index=218&type=chunk) - Viatris has four reportable segments: **Developed Markets**, **Greater China**, **JANZ**, and **Emerging Markets**[219](index=219&type=chunk) [Certain Market and Industry Factors](index=54&type=section&id=Certain%20Market%20and%20Industry%20Factors) The pharmaceutical industry faces challenges from rigorous regulatory approvals, rapid generic entry, government price reductions, and international risks including inflation and geopolitical events - Obtaining regulatory approval for new pharmaceutical products is **rigorous, costly, and unpredictable**, with delays impacting commercial success[221](index=221&type=chunk)[222](index=222&type=chunk) - **Generic products** contribute significantly to revenues and gross margins at launch but face negative impacts from additional competition[223](index=223&type=chunk) - **Branded products** experience substantial and rapid sales declines upon generic entry after market exclusivity expires[224](index=224&type=chunk) - **Government-imposed price reductions** and **tender systems** negatively impact sales and gross profit in international markets[225](index=225&type=chunk)[226](index=226&type=chunk) - International operations are exposed to risks including **inflation**, **geopolitical events**, **trade controls**, **sanctions**, **supply chain disruptions**, and **foreign currency exchange fluctuations**[227](index=227&type=chunk) [Recent Developments](index=55&type=section&id=Recent%20Developments) Recent developments include a **$2.9 billion** goodwill impairment, an FDA warning for the Indore facility impacting **$500 million** in 2025 revenues, an Idorsia acquisition amendment, and continued share repurchases [Goodwill Impairment](index=55&type=section&id=Goodwill%20Impairment) Viatris recorded a **$2.9 billion** non-cash goodwill impairment charge in Q1 2025, triggered by share price decline and increased geopolitical/economic uncertainty, leading to higher discount rates - A non-cash goodwill impairment charge of **$2.9 billion** was recorded in Q1 2025[231](index=231&type=chunk) - The impairment was triggered by a sharp and sustained decline in **Viatris' share price** and increased geopolitical and economic uncertainty[228](index=228&type=chunk)[230](index=230&type=chunk) - Increased business risks and uncertainty led to an increase in **discount rate assumptions** impacting all reporting units[231](index=231&type=chunk) [Indore Manufacturing Facility](index=56&type=section&id=Indore%20Manufacturing%20Facility) The FDA issued a warning letter and import alert for Viatris' Indore facility, impacting 11 U.S. products and estimated to negatively affect 2025 revenues by **$500 million** and earnings by **$385 million** - The **FDA** issued a warning letter and import alert for Viatris' **Indore** manufacturing facility, affecting **11 U.S. products**[232](index=232&type=chunk) - The Company has implemented a comprehensive remediation plan and is in regular communication with the FDA[233](index=233&type=chunk)[234](index=234&type=chunk) - Estimated negative impact to 2025 total revenues is approximately **$500 million**, and to 2025 earnings from operations is approximately **$385 million**[236](index=236&type=chunk) [Acquisition of Idorsia Products](index=56&type=section&id=Acquisition%20of%20Idorsia%20Products) Viatris acquired global rights to selatogrel and cenerimod from Idorsia; a 2025 amendment reduced contingent milestone payments by **$250 million** in exchange for assuming **$100 million** in development costs - On March 15, 2024, Viatris acquired global development and commercialization rights to **selatogrel** and **cenerimod** from Idorsia for an upfront payment of **$350 million**[238](index=238&type=chunk) - An amendment on February 25, 2025, granted Viatris additional territory rights for **cenerimod**, a **$250 million** reduction in contingent milestone payments, and additional personnel[239](index=239&type=chunk) - In exchange for amended terms, Viatris assumed **$100 million** of Idorsia's development cost obligation[240](index=240&type=chunk) [Share Repurchase Program](index=57&type=section&id=Share%20Repurchase%20Program) Viatris' Board authorized a **$1.0 billion** increase to its share repurchase program, totaling **$2.0 billion**, with **$850.4 million** in shares repurchased as of June 30, 2025 - The share repurchase program was increased by **$1.0 billion** in February 2024, authorizing repurchases of up to **$2.0 billion** of common stock[242](index=242&type=chunk) - During H1 2025, Viatris repurchased approximately **38.9 million shares** at a cost of **$350.4 million**[242](index=242&type=chunk) - As of June 30, 2025, the Company had repurchased a total of approximately **79.3 million shares** at a cost of **$850.4 million** under the program[242](index=242&type=chunk) [Financial Summary](index=57&type=section&id=Financial%20Summary) Viatris reported **$3.58 billion** in Q2 2025 revenues (down 6%) and a **$4.6 million** net loss; H1 2025 revenues were **$6.84 billion** (down 8%) with a **$3.05 billion** net loss due to goodwill impairment Financial Summary (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :------------------------------- | :------------------------------- | :----------- | :----------------------------- | :----------------------------- | :----------- | | Total revenues | $3,582.1 | $3,796.6 | $(214.5) | $6,836.4 | $7,460.0 | $(623.6) | | Gross profit | $1,332.9 | $1,445.4 | $(112.5) | $2,494.1 | $2,949.4 | $(455.3) | | Earnings (loss) from operations | $233.0 | $(239.9) | $472.9 | $(2,649.2) | $(36.0) | $(2,613.2) | | Net loss | $(4.6) | $(326.4) | $321.8 | $(3,046.6) | $(212.5) | $(2,834.1) | | Diluted loss per share | $0.00 | $(0.27) | $0.27 | $(2.58) | $(0.18) | $(2.40) | [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Viatris' total revenues decreased by 6% in Q2 2025 and 8% in H1 2025 due to divestitures and the Indore Impact, with a **$2.94 billion** goodwill impairment impacting H1 operating expenses [Total Revenues](index=59&type=section&id=Total%20Revenues) Total revenues decreased by 6% to **$3.58 billion** in Q2 2025 and by 8% to **$6.84 billion** in H1 2025, primarily due to divestitures and the Indore Impact Consolidated Total Revenues (in millions, except %s) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Total net sales | $3,569.0 | $3,785.9 | (6)% | $6,812.2 | $7,439.4 | (8)% | | Consolidated total revenues | $3,582.1 | $3,796.6 | (6)% | $6,836.4 | $7,460.0 | (8)% | - Net sales decreased by approximately **$212.2 million** (6%) in Q2 2025 and **$449.6 million** (6%) in H1 2025 due to 2024 divestitures[248](index=248&type=chunk)[273](index=273&type=chunk) - The **Indore Impact** contributed approximately **$160 million** to the Q2 2025 net sales decrease and **$300 million** to the H1 2025 net sales decrease[248](index=248&type=chunk)[273](index=273&type=chunk) - On a constant currency basis, net sales from the remaining business decreased by approximately **2%** for both Q2 and H1 2025[248](index=248&type=chunk)[273](index=273&type=chunk) [Developed Markets Segment](index=60&type=section&id=Developed%20Markets%20Segment) Developed Markets net sales decreased by 9% to **$2.12 billion** in Q2 2025 and 11% to **$4.01 billion** in H1 2025, primarily due to divestitures and the Indore Impact - **Developed Markets** net sales decreased by **$199.9 million** (9%) in Q2 2025 and **$473.6 million** (11%) in H1 2025[252](index=252&type=chunk)[277](index=277&type=chunk) - The **Indore Impact** contributed approximately **$110 million** to Q2 2025 net sales decrease and **$190 million** to H1 2025 net sales decrease in Developed Markets[252](index=252&type=chunk)[277](index=277&type=chunk) [Greater China Segment](index=60&type=section&id=Greater%20China%20Segment) Greater China net sales increased by 9% to **$588.9 million** in Q2 2025 and 6% to **$1.14 billion** in H1 2025, driven by strong performance across multiple channels - **Greater China** net sales increased by **$49.9 million** (9%) in Q2 2025 and **$61.5 million** (6%) in H1 2025[253](index=253&type=chunk)[278](index=278&type=chunk) - Constant currency net sales increased by approximately **9%** in Q2 2025 and **7%** in H1 2025, driven by strong growth across e-commerce, retail, and private hospitals[253](index=253&type=chunk)[278](index=278&type=chunk) [JANZ Segment](index=60&type=section&id=JANZ%20Segment) JANZ net sales decreased by 13% to **$305.7 million** in Q2 2025 and **$581.8 million** in H1 2025, primarily due to government price reductions, increased competition, and the Indore Impact - **JANZ** net sales decreased by **$43.9 million** (13%) in Q2 2025 and **$85.6 million** (13%) in H1 2025[254](index=254&type=chunk)[279](index=279&type=chunk) - The decrease was primarily driven by lower volumes in Japan and Australia due to **government price reductions** and **additional competition**[254](index=254&type=chunk)[279](index=279&type=chunk) - The **Indore Impact** contributed approximately **$3 million** to Q2 2025 net sales decrease and **$6 million** to H1 2025 net sales decrease in JANZ[254](index=254&type=chunk)[279](index=279&type=chunk) [Emerging Markets Segment](index=60&type=section&id=Emerging%20Markets%20Segment) Emerging Markets net sales decreased by 4% to **$555.1 million** in Q2 2025 and 11% to **$1.08 billion** in H1 2025, largely due to divestitures and the Indore Impact on the ARV business - **Emerging Markets** net sales decreased by **$23.0 million** (4%) in Q2 2025 and **$129.5 million** (11%) in H1 2025[255](index=255&type=chunk)[280](index=280&type=chunk) - The decrease was partially driven by an unfavorable foreign currency translation impact of approximately **$4.3 million** (1%) in Q2 and **$32.0 million** (3%) in H1[255](index=255&type=chunk)[280](index=280&type=chunk) - Lower volumes in the **ARV business**, mainly due to the **Indore Impact**, contributed approximately **$45 million** to the Q2 2025 decrease and **$103 million** to the H1 2025 decrease[255](index=255&type=chunk)[280](index=280&type=chunk) [Cost of Sales and Gross Profit](index=60&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) Cost of sales decreased in Q2 and H1 2025 due to lower net sales; gross profit for Q2 2025 was **$1.33 billion** (37% margin) and for H1 2025 was **$2.49 billion** (36% margin) - Cost of sales decreased from **$2.35 billion** in Q2 2024 to **$2.25 billion** in Q2 2025, and from **$4.51 billion** in H1 2024 to **$4.34 billion** in H1 2025[256](index=256&type=chunk)[281](index=281&type=chunk) - Gross profit for Q2 2025 was **$1.33 billion** (**37% gross margin**), and for H1 2025 was **$2.49 billion** (**36% gross margin**)[257](index=257&type=chunk)[282](index=282&type=chunk) - Adjusted gross margins were approximately **57%** for Q2 2025 and **56%** for H1 2025[257](index=257&type=chunk)[282](index=282&type=chunk) [Operating Expenses](index=61&type=section&id=Operating%20Expenses) R&D expense increased in Q2 and H1 2025 due to development programs, SG&A decreased due to divestitures, and a **$2.94 billion** goodwill impairment charge was recorded in H1 2025 - **R&D expense** increased by **$14.7 million** in Q2 2025 and **$37.0 million** in H1 2025, primarily due to selatogrel and cenerimod development programs[259](index=259&type=chunk)[284](index=284&type=chunk) - **SG&A expense** decreased by **$108.3 million** in Q2 2025 and **$177.7 million** in H1 2025, mainly due to divestitures and lower acquisition/divestiture-related costs[260](index=260&type=chunk)[286](index=286&type=chunk) - A **goodwill impairment charge** of **$2.94 billion** was recorded in Q1 2025[287](index=287&type=chunk) Litigation Settlements and Other Contingencies, Net (in millions) | Period | 2025 | 2024 | | :------------------------------------------ | :------- | :------- | | Three Months Ended June 30, Net | $(47.6) | $131.0 | | Six Months Ended June 30, Net | $(121.1) | $207.8 | [Interest Expense](index=62&type=section&id=Interest%20Expense) Interest expense decreased by **$29.2 million** to **$116.6 million** in Q2 2025 and by **$52.1 million** to **$232.1 million** in H1 2025, primarily due to 2024 debt repayments - **Interest expense** decreased by **$29.2 million** in Q2 2025 and **$52.1 million** in H1 2025, primarily due to 2024 debt repayments[265](index=265&type=chunk)[291](index=291&type=chunk) [Other Expense (Income), Net](index=62&type=section&id=Other%20Expense%20(Income),%20Net) Other expense, net, significantly increased to **$333.5 million** in Q2 2025 and **$432.8 million** in H1 2025, driven by losses from remeasuring Biocon Biologics CCPS to fair value - Other expense, net, totaled **$333.5 million** in Q2 2025 and **$432.8 million** in H1 2025[266](index=266&type=chunk)[292](index=292&type=chunk) - The increase was primarily driven by a loss of **$284.0 million** in Q2 2025 and **$399.8 million** in H1 2025 from remeasuring the **CCPS in Biocon Biologics** to fair value[267](index=267&type=chunk)[293](index=293&type=chunk) [Income Tax (Benefit) Provision](index=62&type=section&id=Income%20Tax%20(Benefit)%20Provision) Viatris recognized an income tax benefit of **$212.5 million** in Q2 2025 and **$267.5 million** in H1 2025, primarily due to the loss before income taxes, partially offset by minimal goodwill impairment tax benefit - **Income tax benefit** was **$212.5 million** for Q2 2025 and **$267.5 million** for H1 2025[268](index=268&type=chunk)[294](index=294&type=chunk) - The benefit was primarily driven by the loss before income taxes, partially offset by minimal tax benefit from the **goodwill impairment charge** and a **$17.7 million** accrual for a Swedish tax matter[268](index=268&type=chunk)[294](index=294&type=chunk) [Use of Non-GAAP Financial Measures](index=67&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) Viatris uses non-GAAP measures such as adjusted cost of sales, adjusted gross margin, adjusted net earnings, and adjusted EBITDA to provide a clearer view of operational performance - **Non-GAAP measures** are used internally for forecasting, budgeting, measuring operating performance, and incentive-based awards[296](index=296&type=chunk) - **Adjusted cost of sales** and **adjusted gross margin** exclude restructuring, acquisition/divestiture-related costs, purchase accounting amortization, and share-based compensation expense[297](index=297&type=chunk) - **Adjusted net earnings** and **adjusted EPS** exclude items such as purchase accounting amortization, goodwill impairment, litigation settlements, and fair value adjustments[298](index=298&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk)[306](index=306&type=chunk) Reconciliation of U.S. GAAP Net Loss to Adjusted Net Earnings and EPS (in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. GAAP net loss | $(4.6) | $(326.4) | $(3,046.6) | $(212.5) | | Adjusted net earnings | $726.0 | $826.5 | $1,326.3 | $1,639.2 | | U.S. GAAP diluted loss per share | $0.00 | $(0.27) | $(2.58) | $(0.18) | | Adjusted EPS | $0.62 | $0.69 | $1.11 | $1.36 | Reconciliation of U.S. GAAP Net Loss to EBITDA and Adjusted EBITDA (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. GAAP net loss | $(4.6) | $(326.4) | $(3,046.6) | $(212.5) | | EBITDA | $577.8 | $540.3 | $(1,739.0) | $1,574.3 | | Adjusted EBITDA | $1,078.8 | $1,207.9 | $2,002.3 | $2,401.3 | [Liquidity and Capital Resources](index=70&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash from operations decreased to **$755.2 million** in H1 2025; investing activities used **$117.6 million**, and financing activities used **$829.4 million**, with **$566.4 million** cash and **$4.1 billion** in credit facilities [Operating Activities](index=70&type=section&id=Operating%20Activities) Net cash from operating activities decreased by **$238.5 million** to **$755.2 million** in H1 2025, primarily due to lower operating earnings from divestitures and the Indore Impact - Net cash provided by operating activities decreased by **$238.5 million** to **$755.2 million** for H1 2025[311](index=311&type=chunk) - The decrease was principally due to lower operating earnings from 2024 divestitures and the timing of cash payments and collections[312](index=312&type=chunk) [Investing Activities](index=71&type=section&id=Investing%20Activities) Net cash used in investing activities was **$117.6 million** in H1 2025, a **$339.1 million** decrease from the prior year, including **$95.5 million** in capital expenditures - Net cash used in investing activities was **$117.6 million** for H1 2025, compared to **$221.5 million** provided in the prior year[314](index=314&type=chunk) - Capital expenditures for H1 2025 totaled approximately **$95.5 million**, with **$300 million to $400 million** expected for the full 2025 calendar year[315](index=315&type=chunk) [Financing Activities](index=71&type=section&id=Financing%20Activities) Net cash used in financing activities decreased to **$829.4 million** in H1 2025, including **$350.4 million** for share repurchases and **$283.1 million** for cash dividends - Net cash used in financing activities was **$829.4 million** for H1 2025, compared to **$1.27 billion** in the prior year[316](index=316&type=chunk) - Significant financing activities in H1 2025 included **$350.4 million** for share repurchases and **$283.1 million** for cash dividends paid[317](index=317&type=chunk) [Capital Resources](index=71&type=section&id=Capital%20Resources) As of June 30, 2025, Viatris had **$566.4 million** in cash and access to **$3.5 billion** Revolving Facility and **$600 million** Receivables Facility, with no outstanding borrowings - **Cash and cash equivalents** totaled **$566.4 million** at June 30, 2025[317](index=317&type=chunk) - The Company has access to a **$3.5 billion Revolving Facility** and a **$600 million Receivables Facility**, with no outstanding borrowings as of June 30, 2025[318](index=318&type=chunk)[320](index=320&type=chunk) - Viatris is in compliance with its **debt covenants** at June 30, 2025, and expects to remain in compliance for the next twelve months[327](index=327&type=chunk) [Long-term Debt Maturity](index=72&type=section&id=Long-term%20Debt%20Maturity) Mandatory minimum repayments on Viatris' long-term debt total **$14.012 billion**, with significant amounts due in 2026 (**$1.953 billion**), 2027 (**$1.752 billion**), and 2028 (**$1.634 billion**) Mandatory Minimum Repayments on Long-Term Debt (as of June 30, 2025, in millions) | Year | Total | | :----- | :------ | | 2025 | $0 | | 2026 | $1,953 | | 2027 | $1,752 | | 2028 | $1,634 | | 2029 | $0 | | Thereafter | $8,673 | | Total | $14,012 | [Supplemental Guarantor Financial Information](index=72&type=section&id=Supplemental%20Guarantor%20Financial%20Information) This section provides unaudited combined summarized financial information for Viatris Inc. and its guarantors, reporting a **$(3.0466 billion)** net loss for H1 2025 - **Viatris Inc.**, **Mylan Inc.**, **Utah Acquisition Sub Inc.**, and **Mylan II B.V.** are issuers or guarantors of various Senior U.S. Dollar Notes[328](index=328&type=chunk)[329](index=329&type=chunk) Combined Summarized Balance Sheet Information (in millions) | Category | June 30, 2025 | December 31, 2024 | | :---------------- | :-------------- | :---------------- | | Current assets | $484.9 | $786.7 | | Non-current assets | $59,025.5 | $61,424.7 | | Current liabilities | $32,812.0 | $30,796.9 | | Non-current liabilities | $11,127.9 | $12,779.0 | Combined Summarized Income Statement Information (Six Months Ended June 30, 2025, in millions) | Metric | Amount | | :---------------- | :----------- | | Revenues | $0 | | Gross profit | $0 | | Loss from operations | $(498.4) | | Net loss | $(3,046.6) | [Other Commitments](index=74&type=section&id=Other%20Commitments) Viatris has accrued approximately **$454.4 million** for legal contingencies and has ongoing financial obligations from transition services, manufacturing, supply, and distribution agreements - Viatris has approximately **$454.4 million** accrued for legal contingencies at June 30, 2025[335](index=335&type=chunk) - The Company has ongoing financial obligations under **transition services**, **manufacturing and supply**, and **distribution agreements** related to its divestitures[337](index=337&type=chunk) [Application of Critical Accounting Policies](index=74&type=section&id=Application%20of%20Critical%20Accounting%20Policies) This section details the **$2.94 billion** goodwill impairment charge in Q1 2025, triggered by market conditions and increased business risks, leading to higher discount rates in valuation models - The Company reviews goodwill for impairment annually on **April 1st** or more frequently if triggering events occur[338](index=338&type=chunk) - A **$2.94 billion** goodwill impairment charge was recorded in Q1 2025, affecting **North America ($707.0 million)**, **Europe ($1.554 billion)**, **JANZ ($300.8 million)**, and **Emerging Markets ($375.0 million)**[342](index=342&type=chunk) - The impairment was driven by a sharp decline in share price and increased geopolitical/economic uncertainty, leading to higher **discount rate assumptions**[338](index=338&type=chunk)[341](index=341&type=chunk) - The **Greater China** reporting unit's estimated fair value exceeded its carrying value by approximately **$322.0 million** (5.8%) as of March 31, 2025[347](index=347&type=chunk) PART II — OTHER INFORMATION [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) For comprehensive market risk disclosures, including foreign currency and interest rate risks, refer to 'Item 7A' in Viatris' 2024 Form 10-K - For disclosures about market risk, refer to **'Item 7A. Quantitative and Qualitative Disclosures about Market Risk'** in Viatris' 2024 Form 10-K[349](index=349&type=chunk) [ITEM 4. Controls and Procedures](index=76&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Viatris Inc.'s disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting identified in Q2 2025 - The Company's **disclosure controls and procedures** were effective as of June 30, 2025[350](index=350&type=chunk) - No material changes in the Company's **internal control over financial reporting (ICFR)** occurred during Q2 2025[351](index=351&type=chunk) [ITEM 1. Legal Proceedings](index=76&type=section&id=ITEM%201.%20Legal%20Proceedings) Information regarding Viatris Inc.'s legal proceedings is detailed in **Note 17, 'Litigation,'** within the accompanying Notes to interim financial statements - For information regarding legal proceedings, refer to **Note 17 Litigation** in the accompanying Notes to interim financial statements[353](index=353&type=chunk) [ITEM 1A. Risk Factors](index=76&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to Viatris Inc.'s risk factors from its 2024 Form 10-K, except for a risk factor previously disclosed in the Q1 2025 Form 10-Q - No material changes in risk factors from Viatris' 2024 Form 10-K, except for the risk factor disclosed in the **Q1 2025 Form 10-Q**[354](index=354&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, Viatris Inc. repurchased approximately **20.2 million shares** for **$175.0 million** under its program, with **$1.15 billion** remaining available Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :---------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :--------------------------------------------------------------------------------- | | April 1 - April 30, 2025 | 6,346,050 | $8.33 | 6,346,050 | $1,271,743,899 | | May 1 - May 31, 2025 | 13,897,492 | $8.79 | 13,897,492 | $1,149,630,459 | | June 1 - June 30, 2025 | — | — | — | — | | Total | 20,243,542 | $8.64 | 20,243,542 | $1,149,630,459 | - During Q2 2025, the Company repurchased approximately **20.2 million shares** of common stock at a cost of approximately **$175.0 million**[357](index=357&type=chunk) [ITEM 5. Other Information](index=77&type=section&id=ITEM%205.%20Other%20Information) Corinne Le Goff, Chief Commercial Officer, adopted a Rule 10b5-1(c) trading plan on June 12, 2025, for the sale of up to **7,032 shares** of common stock - **Corinne Le Goff**, Chief Commercial Officer, adopted a **Rule 10b5-1(c) trading plan** on June 12, 2025[358](index=358&type=chunk) - The plan provides for the sale of up to **7,032 shares** of common stock until July 31, 2026[358](index=358&type=chunk) [ITEM 6. Exhibits](index=78&type=section&id=ITEM%206.%20Exhibits) This section lists Form 10-Q exhibits, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents for financial data - Exhibits include certifications from the **Principal Executive Officer** and **Principal Financial Officer**[361](index=361&type=chunk) - **Inline XBRL documents** are provided for interactive data[361](index=361&type=chunk) [SIGNATURES](index=79&type=section&id=SIGNATURES) The Form 10-Q is signed by Scott A. Smith, Chief Executive Officer, and Theodora Mistras, Chief Financial Officer, on August 7, 2025 - The report is signed by **Scott A. Smith**, Chief Executive Officer, and **Theodora Mistras**, Chief Financial Officer, on August 7, 2025[365](index=365&type=chunk)