GAAP / Non-GAAP Reconciliations
May 9, 2024
Non-GAAP Financial Measures and Other Information
Key References
New product sales, new product launches or new product revenues: Refers to revenue from new products launched in 2024 and the carryover impact of new products, including business development, launched within the last 12 months.
Operational change: Refers to constant currency percentage changes and is derived by translating amounts for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2024 constant currency net sales, revenues and adjusted EBITDA to the corresponding amount in the prior year.
Divestiture-adjustedoperational change: Refers to operational changes, further adjusted for the impact of the proportionate results from the divestitures that closed in 2023 and 2024, from the 2023 period by excluding such net sales from those divested businesses from comparable prior periods. Also, for adjusted EBITDA and adjusted EPS, refers to operational changes, adjusted as outlined in the previous sentence and further adjusted for the mark up for the TSA services provided to Biocon Biologics from the 2023 period.
Closed divestitures or divestitures closed in 2023 and 2024: Refers to the divestiture of the Company's rights to two women's healthcare products in certain countries (other than the U.K., which remains subject to regulatory approval) that closed in December 2023, the divestitures of the commercialization rights in certain of the Upjohn Distributor markets that closed in 2023, and the divestiture of the women's healthcare business that closed in March 2024.
Remaining divestitures or pending announced divestitures: Refers to the remaining announced divestitures that have not been consummated to date, including the divestiture of substantially all of our over-the-counter ("OTC") business and the remaining commercialization rights in the Upjohn Distributor Markets.
Non-GAAP Financial Measures
This presentation includes the presentation and discussion of certain financial information that differs from what is reported under accounting principles generally accepted in the United States ("U.S. GAAP"). These non-GAAP financial measures, including, but not limited to, adjusted EBITDA, free cash flow, free cash flow excluding transaction costs, adjusted EPS, adjusted gross margin, adjusted gross profit, 2023 adjusted total revenues excluding divestitures, 2023 adjusted net sales excluding divestitures, 2023 adjusted EBITDA excluding divestitures, adjusted SG&A and as a percentage of total revenues, adjusted R&D and as a percentage of total revenues, adjusted IPR&D and as a percentage of total revenues, constant currency adjusted EBITDA, adjusted EBITDA margin, adjusted net earnings, adjusted effective tax rate, adjusted earnings from operations, adjusted interest expense, adjusted other (income) expense, net, constant currency total revenues, constant currency net sales, constant currency adjusted EBITDA, divestiture-adjusted change, divestiture-adjusted operational change, notional debt, gross leverage ratio and long-term gross leverage ratio, are presented in order to supplement investors' and other readers' understanding and assessment of the financial performance of Viatris Inc. ("Viatris" or the "Company"). Free cash flow refers to U.S. GAAP net cash provided by operating activities, less capital expenditures. Adjusted EBITDA margins refers to adjusted EBITDA divided by total revenues. Adjusted EPS refers to adjusted net earnings divided by the weighted average number of diluted shares of common stock outstanding. Viatris has provided reconciliations of such non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures. Investors and other readers are encouraged to review the related U.S. GAAP financial measures and the reconciliations of the non-GAAP measures to their most directly comparable U.S. GAAP measures set forth in this presentation on our website at https://investor.viatris.com/financial-information/non-gaap-reconciliations, and investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with U.S. GAAP.
SG&A and R&D TSA Reimbursement
Expenses related to TSA services provided for divested businesses are recorded in their respective functional line item; however, reimbursement of those expenses plus the mark-up is included in other income, net. For comparability purposes, amounts related to the cost reimbursement are reclassified to adjusted SG&A and adjusted R&D. This reclassification has no impact on adjusted net earnings, adjusted EBITDA or adjusted EPS.
2024 Guidance
The Company is not providing forward-looking guidance for U.S. GAAP net earnings or U.S. GAAP diluted earnings per share (EPS) or a quantitative reconciliation of its 2024 adjusted EBITDA or adjusted EPS guidance to the most directly comparable U.S. GAAP measures, U.S. GAAP net earnings or U.S. GAAP diluted EPS, respectively, because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items, including integration, acquisition and divestiture-related expenses, restructuring expenses, asset impairments, litigation settlements, and other contingencies, such as changes to contingent consideration, acquired IPR&D and certain other gains or losses, including for the fair value accounting for non-marketable equity investments, as well as related income tax accounting, because certain of these items have not occurred, are out of the Company's control and/or cannot be reasonably predicted without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period.
Note: Certain amounts in this presentation may not add up due to rounding. All percentages have been calculated using unrounded amounts.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 2 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions, except Adjusted EPS)
Full-Year 2024 Guidance Items as of May 9, 2024 (1)
GAAP | Non-GAAP | ||
Total Revenues | $14,980 - $15,480 | N/A | |
Adjusted EBITDA | N/A | $4,710 | - $5,010 |
Net Cash provided by | $2,710 - $3,010 | N/A | |
Operating Activities | |||
Free Cash Flow | N/A | $2,260 | - $2,660 |
Adjusted EPS | N/A | $2.66 | - $2.81 |
For key references and non-GAAP measures, see slide 2
- Includes the full-year expected performance for the pending announced divestiture of substantially all of our OTC business, and excludes any potential related costs, such as taxes and transaction costs. Also excludes any acquired IPR&D to be incurred in any future period as it cannot be reasonably forecasted.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 3 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions)
Reconciliation of Estimated 2024 U.S. GAAP Net Cash Provided by Operating Activities to Free Cash Flow as of May 9, 2024 (1)
Estimated U.S. GAAP Net Cash provided by Operating Activities | $2,710 | - $3,010 |
Less: Capital Expenditures | ($350) - ($450) | |
Free Cash Flow | $2,260 - $2,660 | |
For key references and non-GAAP measures, see slide 2
- Includes the full-year expected performance for the pending announced divestiture of substantially all of our OTC business, and excludes any potential related costs,
such as taxes and transaction costs. Also excludes any acquired IPR&D to be incurred in any future period as it cannot be reasonably forecasted.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 4 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions, except Adjusted EPS)
Full-Year 2024 Guidance Items as of February 28, 2024 (1)
GAAP | Non-GAAP | ||
Total Revenues | $15,250 - $15,750 | N/A | |
Adjusted EBITDA | N/A | $4,800 | - $5,100 |
Net Cash provided by | $2,750 - $3,050 | N/A | |
Operating Activities | |||
Free Cash Flow | N/A | $2,300 | - $2,700 |
Adjusted EPS | N/A | $2.70 | - $2.85 |
For key references and non-GAAP measures, see slide 2
- Included the full-year expected performance for the then-pending announced divestitures of substantially all of our OTC business, API business in India, and women's healthcare business, and excluded any potential related costs, such as taxes and transaction costs. Also excluded any acquired IPR&D to be incurred in any future period as it could not be reasonably forecasted.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 5 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions)
Reconciliation of Estimated 2024 U.S. GAAP Net Cash Provided by Operating Activities to Free Cash Flow as of February 28, 2024 (1)
Estimated U.S. GAAP Net Cash provided by Operating Activities | $2,750 | - $3,050 |
Less: Capital Expenditures | ($350) - ($450) | |
Free Cash Flow | $2,300 - $2,700 | |
For key references and non-GAAP measures, see slide 2
- Included the full-year expected performance for the then-pending announced divestitures of substantially all of our OTC business, API business in India, and women's healthcare business, and excluded any potential related costs, such as taxes and transaction costs. Also excluded any acquired IPR&D to be incurred in
any future period as it could not be reasonably forecasted.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 6 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions, except per share amounts)
Net Earnings to Adjusted Net Earnings and U.S. GAAP EPS to Adjusted EPS
Three Months Ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
U.S. GAAP net earnings and U.S. GAAP diluted EPS | $ | 113.9 | $ | 0.09 | $ | 224.7 | $ | 0.19 |
Purchase accounting amortization (primarily included in cost of sales) | 611.7 | 653.3 | ||||||
Litigation settlements and other contingencies, net | 76.8 | 0.6 | ||||||
Interest expense (primarily amortization of premiums and discounts on long term debt) | (11.2) | (10.3) | ||||||
Gain on divestitures of businesses (included in other income, net) (a) | (70.4) | - | ||||||
Acquisition and divestiture-related costs (primarily included in SG&A) (b) | 87.5 | 58.1 | ||||||
Restructuring-related costs (c) | 19.6 | 9.7 | ||||||
Share-based compensation expense | 46.7 | 42.6 | ||||||
Other special items included in: | ||||||||
Cost of sales (d) | 28.2 | 38.8 | ||||||
Research and development expense | 2.4 | 2.0 | ||||||
Selling, general and administrative expense | 16.1 | 14.9 | ||||||
Other income, net | (44.5) | (21.8) | ||||||
Tax effect of the above items and other income tax related items (e) | (64.1) | (79.7) | ||||||
Adjusted net earnings and adjusted EPS | $ | 812.7 | $ | 0.67 | $ | 932.9 | $ | 0.77 |
Weighted average diluted shares outstanding | 1,209.5 | 1,205.6 | ||||||
Significant items include the following:
- For the three months ended March 31, 2024, includes a pre-tax gain on the divestiture of the women's healthcare business of approximately $80.8 million for the difference between the consideration received and the carrying value of the assets transferred (including an allocation of goodwill). Also includes a pre-tax charge related to the planned divestiture of the API business of approximately $10.4 million to write down the disposal group to fair value, less cost to sell.
- Acquisition and divestiture-related costs consist primarily of transaction costs including legal and consulting fees and integration activities.
- For the three months ended March 31, 2024, charges include approximately $4.0 million in cost of sales and approximately $15.6 million in SG&A.
- For the three months ended March 31, 2024, charges include incremental manufacturing variances at plants in the 2020 restructuring program of approximately $12.6 million.
- Adjusted for changes for uncertain tax positions.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 7 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions)
Net Earnings to Adjusted EBITDA
Three Months Ended | ||||
March 31, | ||||
2024 | 2023 | |||
U.S. GAAP net earnings | $ | 113.9 | $ | 224.7 |
Add adjustments: | ||||
Income tax provision | 90.7 | 98.0 | ||
Interest expense (a) | 138.4 | 147.0 | ||
Depreciation and amortization (b) | 691.0 | 730.0 | ||
EBITDA | $ | 1,034.0 | $ | 1,199.7 |
Add / (deduct) adjustments: | ||||
Share-based compensation expense | 46.7 | 42.6 | ||
Litigation settlements and other contingencies, net | 76.8 | 0.6 | ||
Gain on divestitures of businesses | (70.4) | - | ||
Restructuring, acquisition and divestiture-related and other special items (c) | 106.3 | 98.0 | ||
Adjusted EBITDA | $ | 1,193.4 | $ | 1,340.9 |
- Includes amortization of premiums and discounts on long-term debt.
- Includes purchase accounting related amortization.
- See items detailed in the Reconciliation of U.S. GAAP Net Earnings to Adjusted Net Earnings.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 8 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions, except %s)
Summary of Total Revenues by Segment - Q1 2024
Three Months Ended | |||||||||||||||||
March 31, | |||||||||||||||||
Divestiture | |||||||||||||||||
2024 Constant | Constant | Adjusted | |||||||||||||||
2024 Currency | Currency | Currency % | Closed | 2023 Adjusted | Operational | ||||||||||||
2024 | 2023 | % Change | Impact (1) | Revenues | Change (2) | Divestitures (3) | Ex Divestitures (4) | Change (5) | |||||||||
Net sales | |||||||||||||||||
Developed Markets | $ | 2,165.4 | $ | 2,170.4 | - % | $ | (14.1) | $ | 2,151.3 | (1)% | $ | 15.0 | $ | 2,155.4 | - % | ||
Greater China | 543.9 | 564.6 | (4)% | 21.5 | 565.4 | - % | - | 564.6 | - % | ||||||||
JANZ | 317.8 | 342.2 | (7)% | 30.8 | 348.6 | 2 % | 0.1 | 342.1 | 2 % | ||||||||
Emerging Markets | 626.4 | 641.9 | (2)% | 38.9 | 665.3 | 4 % | 30.6 | 611.3 | 9 % | ||||||||
Total net sales | $ | 3,653.5 | $ | 3,719.1 | (2)% | $ | 77.1 | $ | 3,730.6 | - % | $ | 45.7 | $ | 3,673.4 | 2 % | ||
Other revenues (6) | 9.9 | 10.0 | NM | 0.1 | 10.0 | NM | |||||||||||
Consolidated total revenues (7) | $ | 3,663.4 | $ | 3,729.1 | (2)% | $ | 77.2 | $ | 3,740.6 | - % | |||||||
- Currency impact is shown as unfavorable (favorable).
- The constant currency percentage change is derived by translating net sales or revenues for the current period at prior year comparative period exchange rates, and in doing so shows the percentage change from 2024 constant currency net sales or revenues to the corresponding amount in the prior year.
- Represents net sales relating to divestitures that have closed during 2023 and 2024 in the relevant period.
- Represents U.S. GAAP net sales minus net sales relating to divestitures that have closed during 2023 and 2024 for the relevant period.
- See key references on slide 2.
- For the three months ended March 31, 2024, other revenues in Developed Markets, JANZ, and Emerging Markets were approximately $7.2 million, $0.3 million, and $2.4 million, respectively.
- Amounts exclude intersegment revenue which eliminates on a consolidated basis.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 9 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
Viatris Inc. and Subsidiaries | Reconciliation of Non-GAAP Financial Measures (Unaudited; in millions, except %s)
Cost of Sales
Three Months Ended | |||||||
March 31, | |||||||
2024 | 2023 | ||||||
U.S. GAAP cost of sales | $ | 2,159.4 | $ | 2,186.9 | |||
Deduct: | |||||||
Purchase accounting amortization and other related items | (611.5) | (653.4) | |||||
Acquisition and divestiture-related costs | (6.3) | (5.0) | |||||
Restructuring related costs | (4.0) | (10.9) | |||||
Share-based compensation expense | (0.8) | (0.6) | |||||
Other special items | (28.2) | (38.8) | |||||
Adjusted cost of sales | $ | 1,508.6 | $ | 1,478.2 | |||
Adjusted gross profit (a) | $ | 2,154.8 | $ | 2,250.9 | |||
Adjusted gross margin (a) | 59 % | 60 % | |||||
- U.S. GAAP gross profit is calculated as total revenues less U.S. GAAP cost of sales. U.S. GAAP gross margin is calculated as U.S. GAAP gross profit divided by total revenues. Adjusted gross profit is calculated as total revenues less adjusted cost of sales. Adjusted gross margin is calculated as adjusted gross profit divided by total revenues.
This document contains proprietary information of Viatris Inc. Unauthorized use, duplication, dissemination or disclosure to third parties is strictly prohibited. | 10 |
© 2024 Viatris Inc. All Rights Reserved. VIATRIS and the Viatris Logo are trademarks of Mylan Inc., a Viatris company. | |
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Viatris Inc. published this content on 09 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 May 2024 11:04:41 UTC.