Viatris Inc Q1 FY2025 earnings call

Highlights include: Q1 operational performance in line with expectations; significant pipeline progress with three positive Phase 3 data readouts; returned ~$450 million to shareholders ($300 million via share repurchases); continued remediation of Indore facility on track to request re-inspection mid-year; progress on enterprise-wide strategic review; Q1 operational performance in line with expectations; significant pipeline progress including three positive Phase 3 data readouts; returned ~$450 million to shareholders; continued remediation of Indore facility; on track to request re-inspection mid-year; significant progress on enterprise wide strategic review.

In Q1, Viatris delivered $3.3 billion in total revenues, down 2% on a divestiture-adjusted operational basis. By region: Europe and China had growth; North America decreased 8% primarily due to Indore impact and select generic product competition; Emerging markets net sales decreased ~5% mainly from Indore impact and ARV generics business; JANZ segment net sales decreased ~6% due to government price regulations in Japan and Australia and reimbursement changes; Greater China net sales grew 4% from diversified model across e-commerce, retail, and private hospitals. Adjusted gross margin was ~56% in the quarter, in line with expectations.

Reaffirming 2025 outlook; Q1 in line with expectations; total revenues expected to be higher in second half due to Indore impact, normal product seasonality, and back-weighted new product launches; adjusted EBITDA and adjusted EPS expected to be higher in second half; free cash flow expected to be lowest in Q2 due to timing of semi-annual interest payments and working capital requirements; reaffirming 2025 financial guidance, with second half expected to be stronger in terms of revenue, EBITDA, and EPS; free cash flow Q2 lowest due to interest and working capital.

Tariffs on pharmaceuticals could have negative financial impact and potential for additional supply shortages and disruptions affecting patient access; company is concerned about potential impact of tariffs on financials and patient access; tariffs, if enacted, could harm financials and patient access.

Q: Chris Schott from JPMorgan asked about peak sales opportunity for meloxicam and how to mitigate tariff impact.

A: Scott Smith said more than 50% of US revenues come from US-based manufacturing, working on mitigation strategies like increasing US production, adjusting inventory; Corinne Le Goff and Philippe Martin talked about meloxicam's potential market and data.

Q: Ash Verma from UBS asked about share repurchases and fast-acting meloxicam data.

A: Scott Smith said committed to $500M - $650M share repurchases with strategic flexibility; Doretta Mistras mentioned free cash flow allows flexibility; Philippe Martin talked about fast-acting properties of meloxicam with data on time to pain relief.

Q: David Amsellem from Piper Sandler asked about Indore impact in 2026, Nashik facility, and BD priorities.

A: Scott Smith said remediation in Indore on track, expect rebound in 2026; Nashik facility had 483, committed actions completed; BD focus on in-market or near-to-market assets.

Q: Bhavin Patel from Bank of America asked about brand vs generic drivers and second half revenue ramp.

A: Doretta Mistras said brand resilience driven by China and Europe; generic performance in line without Indore impact; second half revenue expected higher due to Indore impact, seasonality, and new product launches; Philippe Martin mentioned Iron Sucrose, Octreotide LAR, etc. scheduled for second half.

Q: Umer Raffat from Evercore asked about US manufacturing network, meloxicam usage, and risks.

A: Scott Smith talked about US manufacturing network; Philippe Martin said meloxicam trials showed no increased bleeding risk; Corinne Le Goff said meloxicam could be used in hospital and outpatient settings