Viatris(VTRS) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was approximately $3.7 billion, with adjusted EBITDA of approximately $1.2 billion and adjusted EPS of $0.67 per share [9][18] - Free cash flow for the quarter was approximately $565 million, with an adjusted gross margin of approximately 59% [9][24] - The company reaffirmed its 2024 financial guidance, including a new product revenue range of $450 million to $550 million [10][27] Business Line Data and Key Metrics Changes - The North America business declined approximately 3% year-over-year, impacted by formulary changes and channel dynamics, while emerging markets delivered approximately 9% year-over-year operational growth [21][22] - New product revenue was better than expected at $154 million for the quarter, driven by strong performance in products like Yupelri and Tyrvaya [20][21] - The eye care pipeline includes the launch of Ryzumvi in the US and ongoing Phase 3 studies for MR-139 and MR-142 [15][16] Market Data and Key Metrics Changes - Developed markets in Europe grew approximately 2% year-over-year, while JANZ grew approximately 2% due to business expansion in Australia [21][23] - Greater China results were flat compared to Q1 2023, with a focus on the retail segment and self-paid patient base [23] Company Strategy and Development Direction - The company is focused on maintaining base business stability while driving new product revenue and making strategic investments for future growth [6][11] - Recent transactions, including the divestiture of the women's healthcare business and the acquisition of Idorsia, are part of the strategy to enhance the product portfolio and drive innovation [7][19] - The leadership team has been strengthened with new appointments to support the company's growth objectives [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet its financial guidance for 2024, despite challenges in certain markets [27][28] - The company anticipates modest revenue growth in the second half of the year, driven by normal product seasonality and strong uptake of new products [28] Other Important Information - The company returned $393 million to shareholders in Q1 through dividends and share buybacks, with a declared quarterly dividend of $0.12 per share [11][26] - The company ended the quarter with approximately $1 billion in cash and cash equivalents [26] Q&A Session Summary Question: North America softness in brands and GA Depot timeline - Management noted that North America was impacted by formulary changes and channel dynamics, with expectations for offsetting growth in other brands [30][31] - The timeline for GA Depot approval will be clarified after an upcoming meeting with the FDA [33] Question: Tyrvaya growth and free cash flow expectations - Management is optimistic about Tyrvaya's growth trajectory and reaffirmed confidence in achieving $450 million to $550 million in new product revenue [36][37] Question: API and OTC divestiture timelines - The API divestiture is expected to close imminently, while the OTC divestiture is anticipated to close by mid-year, subject to regulatory approvals [39] Question: JANZ business dynamics and new product revenue - JANZ is performing as expected, with growth driven by business activities in Australia, and management is confident in achieving new product revenue guidance [41][43] Question: Idorsia assets and capital deployment strategy - The expansion of site enrollment for Idorsia assets is not reflected in previously presented timelines, and management is exploring various capital deployment opportunities, including share buybacks [46][49] Question: Complex injectables and future launches - The complex injectable portfolio is a priority for the company, with significant ongoing investments and a robust pipeline of products under FDA review [51][53] Question: Sustainability of emerging markets performance - Emerging markets showed strong performance, and management is pleased with the results despite some FX headwinds [56]