Viatris(US:VTRS)2023-02-26 16:00Acquisitions and Divestitures - The Company completed the acquisition of Oyster Point for approximately $425 million in cash, including a contingent value right of up to $60 million based on performance metrics[315]. - The acquisition of Famy Life Sciences was finalized for $281 million, enhancing the Company's portfolio in ophthalmology therapies[316]. - The Biocon Biologics transaction resulted in a $3 billion consideration, including a $2 billion cash payment and a stake of approximately 12.9% in Biocon Biologics[321]. - The Company recognized a gain on the sale of approximately $1.75 billion from the Biocon transaction and has not included the results of the business in its consolidated financial statements since November 29, 2022[321]. - The company plans to divest non-core businesses, including OTC and API segments, as part of its strategic priorities announced in February 2022[383]. - The company incurred acquisition and divestiture related costs of $475.7 million in 2022, compared to $234.6 million in 2021[364]. Financial Performance - Total revenues for the year ended December 31, 2022, were $16.26 billion, a decrease of $1.62 billion, or 9%, compared to $17.89 billion in 2021[333]. - Net sales for the year ended December 31, 2022, were $16.22 billion, down $1.60 billion, or 9%, from $17.81 billion in the prior year[333]. - The decrease in net sales was primarily driven by an unfavorable foreign currency translation impact of approximately $1.24 billion, or 7%[334]. - On a constant currency basis, the decrease in net sales was approximately $359.6 million, or 2% for the year ended December 31, 2022[334]. - Gross profit for the year ended December 31, 2022, was $6.50 billion, with gross margins improving to 40% from 31% in 2021[342]. - U.S. GAAP net earnings for the year ended December 31, 2022 were $2.08 billion, compared to a loss of $1.27 billion in 2021[364]. - Adjusted net earnings for the year ended December 31, 2022 were $4.08 billion, down from $4.41 billion in 2021[364]. - Net earnings for 2022 were $2,078.6 million, a significant recovery from a net loss of $1,269.1 million in 2021[393]. - The company reported a basic earnings per share of $1.71 in 2022, a recovery from a loss per share of $1.05 in 2021[475]. Cost Management and Restructuring - The restructuring program initiated in 2020 aims to optimize commercial capabilities and divest non-viable manufacturing facilities[323]. - The company expects to incur total pre-tax charges of up to approximately $1.4 billion for committed restructuring actions, including approximately $450 million of non-cash charges and estimated cash costs of up to $950 million[324]. - The company anticipates potential annual savings of up to approximately $900 million from the restructuring activities once fully implemented[324]. - SG&A expense for the year ended December 31, 2022 was $4.18 billion, a decrease of $350.1 million from $4.53 billion in the prior year, primarily due to lower restructuring costs[346]. - Research and Development (R&D) expense for the year ended December 31, 2022, was $662.2 million, a decrease of $18.8 million compared to the prior year[344]. Cash Flow and Liquidity - Net cash provided by operating activities decreased by $64.3 million to $2.95 billion in 2022, compared to $3.02 billion in 2021[368]. - The company generated net cash from investing activities of $1.52 billion in 2022, a substantial increase from a net cash outflow of $117.8 million in 2021[370]. - Net cash used in financing activities increased by $865.9 million to $3.88 billion in 2022, compared to $3.01 billion in 2021[371]. - Cash and cash equivalents rose to $1,259.9 million in 2022, compared to $701.2 million in 2021, enhancing liquidity[472]. - Total cash, cash equivalents, and restricted cash at the end of 2022 was $1,262.5 million, up from $706.2 million at the end of 2021[484]. Assets and Liabilities - The company's total assets decreased to $50,022.2 million in 2022 from $54,842.8 million in 2021, primarily due to a reduction in intangible assets[472]. - Total liabilities decreased to $28,949.9 million in 2022 from $34,350.1 million in 2021, reflecting a reduction in long-term debt[472]. - Current liabilities rose to $26,631.5 million in 2022 from $23,619.9 million in 2021, and non-current liabilities decreased slightly to $15,265.2 million from $16,465.6 million[393]. Market and Economic Conditions - The ongoing conflict between Russia and Ukraine had a minimal impact, with combined revenues from both countries representing approximately 1% of total revenues[319]. - The global economy in 2022 was impacted by high inflation and rising energy costs, leading to significant economic volatility and tighter monetary policies[434]. - Viatris' revenues and earnings are significantly exposed to changes in foreign currency exchange rates, which are managed through operational means and forward-exchange contracts[436]. Internal Controls and Compliance - The Company maintained effective internal control over financial reporting as of December 31, 2022, based on COSO criteria[448]. - Viatris Inc. maintained effective internal control over financial reporting as of December 31, 2022, according to the audit opinion[465]. Accounting and Valuation - The Company’s significant accounting policies include critical estimates related to revenue recognition, acquisitions, and legal matters, which could materially impact financial results[403]. - The Company recorded a goodwill impairment charge of $117.0 million related to the potential divestiture of the Upjohn Distributor Markets[346]. - A valuation allowance of $387.0 million has been recorded to measure only the portion of the deferred tax asset that is more likely than not to be realized as of December 31, 2022[430]. - The Company recorded impairment charges for finite-lived intangible assets of $83.4 million and $45.0 million for the years ended December 31, 2021 and 2020, respectively[424].