VIATRIS INC. The following discussion and analysis addresses material changes in the financial condition and results of operations ofViatris Inc. and subsidiaries for the periods presented. Unless context requires otherwise, the "Company," "Viatris ," "our" or "we" refer toViatris Inc. and its subsidiaries. This discussion and analysis should be read in conjunction with the Consolidated Financial Statements, the related Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included inViatris' 2020 Form 10-K, the unaudited interim financial statements and related Notes included in Part I - ITEM 1 of this Form 10-Q and our otherSEC filings and public disclosures. The interim results of operations and comprehensive earnings for the three months endedMarch 31, 2021 , and cash flows for the three months endedMarch 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period. This Form 10-Q contains "forward-looking statements". These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the Combination, the benefits and synergies of the Combination or our global restructuring program, future opportunities for the Company and its products and any other statements regarding the Company's future operations, financial or operating results, capital allocation, dividend policy, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, efforts to create, enhance or otherwise unlock the value of our unique global platform, and other expectations and targets for future periods. Forward-looking statements may often be identified by the use of words such as "will", "may", "could", "should", "would", "project", "believe", "anticipate", "expect", "plan", "estimate", "forecast", "potential", "pipeline", "intend", "continue", "target", "seek" and variations of these words or comparable words. Because forward-looking statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: •the integration of Mylan and the Upjohn Business or the implementation of the Company's global restructuring program being more difficult, time consuming or costly than expected; •the possibility that the Company may be unable to achieve expected benefits, synergies and operating efficiencies in connection with the Combination or its global restructuring program within the expected timeframe or at all; •the possibility that the Company may be unable to successfully integrate Mylan and the Upjohn Business or implement its global restructuring program; •operational or financial difficulties or losses associated with the Company's reliance on agreements with Pfizer in connection with the Combination, including with respect to transition services; •the possibility that the Company may be unable to achieve all intended benefits of its strategic initiatives; •the potential impact of public health outbreaks, epidemics and pandemics, including the ongoing challenges and uncertainties posed by the COVID-19 pandemic; •the Company's failure to achieve expected or targeted future financial and operating performance and results; •actions and decisions of healthcare and pharmaceutical regulators; •changes in relevant laws and regulations, including but not limited to changes in tax, healthcare and pharmaceutical laws and regulations globally; •the ability to attract and retain key personnel; •the Company's liquidity, capital resources and ability to obtain financing; •any regulatory, legal or other impediments to the Company's ability to bring new products to market, including but not limited to "at-risk launches"; •success of clinical trials and the Company's or its partners' ability to execute on new product opportunities and develop, manufacture and commercialize products; •any changes in or difficulties with the Company's manufacturing facilities, including with respect to inspections, remediation and restructuring activities, supply chain or inventory or the ability to meet anticipated demand; •the scope, timing and outcome of any ongoing legal proceedings, including government inquiries or investigations, and the impact of any such proceedings on the Company; •any significant breach of data security or data privacy or disruptions to our information technology systems; •risks associated with having significant operations globally; •the ability to protect intellectual property and preserve intellectual property rights; •changes in third-party relationships; •the effect of any changes in the Company's or its partners' customer and supplier relationships and customer purchasing patterns, including customer loss and business disruption being greater than expected following the Combination; 46 -------------------------------------------------------------------------------- Table of Contents •the impacts of competition, including decreases in sales or revenues as a result of the loss of market exclusivity for certain products; •changes in the economic and financial conditions of the Company or its partners; •uncertainties regarding future demand, pricing and reimbursement for the Company's products; •uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions and global exchange rates; and •inherent uncertainties involved in the estimates and judgments used in the preparation of financial statements, and the providing of estimates of financial measures, in accordance withU.S. GAAP and related standards or on an adjusted basis. For more detailed information on the risks and uncertainties associated withViatris , see the risks described in Part I, Item 1A in the 2020 Form 10-K, and our other filings with theSEC . You can accessViatris' filings with theSEC through theSEC website at www.sec.gov or through our website, andViatris strongly encourages you to do so.Viatris routinely posts information that may be important to investors on our website at investor.viatris.com, and we use this website address as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of theSEC's Regulation Fair Disclosure (Reg FD). The contents of our website are not incorporated by reference in this Form 10-Q and shall not be deemed "filed" under the Securities Exchange Act of 1934, as amended.Viatris undertakes no obligation to update any statements herein for revisions or changes after the filing date of this Form 10-Q other than as required by law. Explanatory Note In accordance with ASC 805, Business Combinations, Mylan is considered the accounting acquirer of the Upjohn Business and all historical financial information of the Company prior toNovember 16, 2020 represents Mylan's historical results and the Company's thereafter. Company OverviewViatris is a global healthcare company formed inNovember 2020 through the combination of Mylan and Upjohn, whose mission is to empower people worldwide to live healthier at every stage of life. By integrating the strengths of these two businesses, including our global workforce of more than 40,000 employees and contractors,Viatris aims to deliver increased access to affordable, quality medicines for patients worldwide regardless of geography or circumstance.Viatris brings together industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise complemented by a strong commitment to quality and unparalleled geographic footprint to deliver high-quality medicines to patients in more than 165 countries and territories.Viatris' portfolio comprises more than 1,400 approved molecules across a wide range of key therapeutic areas, including globally recognized iconic and key brand, generic, complex generic, and biosimilar products.Viatris operates approximately 50 manufacturing sites worldwide that produce oral solid doses, injectables, complex dosage forms and APIs.Viatris is headquartered in theU.S. , with global centers inPittsburgh, Pennsylvania ,Shanghai, China andHyderabad, India .Viatris reports segment information on the basis of markets and geography. In conjunction with the formation ofViatris , the Company has changed its reportable segments, fromNorth America ,Europe , and Rest of World, to Developed Markets,Greater China , JANZ, and Emerging Markets. This approach reflects the Company's focus on bringing its broad and diversified portfolio of branded, complex generics and biosimilars, and generic products to people in markets everywhere. Our Developed Markets segment comprises our operations primarily inNorth America andEurope . OurGreater China segment includes our operations inChina ,Taiwan andHong Kong . Our JANZ segment reflects our operations inJapan ,Australia and New Zealand . Our Emerging Markets segment encompasses our operations in countries with developing markets and emerging economies including countries inAsia , theMiddle East , South andCentral America ,Africa andEastern Europe , and also includes the Company's anti-retroviral franchise. Certain Market and Industry Factors The global pharmaceutical industry is a highly competitive and highly regulated industry. As a result, we face a number of industry-specific factors and challenges, which can significantly impact our results. The following discussion highlights some of these key factors and market conditions. Generic products, particularly in theU.S. , generally contribute most significantly to revenues and gross margins at the time of their launch, and even more so in periods of market exclusivity, or in periods of limited generic competition. As such, the timing of new product introductions can have a significant impact on the Company's financial results. The entrance into the market of additional competition generally has a negative impact on the volume and pricing of the affected products. 47 -------------------------------------------------------------------------------- Table of Contents Additionally, pricing is often affected by factors outside of the Company's control. Conversely, generic products generally experience less volatility over a longer period of time inEurope as compared to theU.S. , primarily due to the role of government oversight of healthcare systems in the region. For branded products, the majority of the product's commercial value is usually realized during the period in which the product has market exclusivity. In theU.S. and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there can often be very substantial and rapid declines in the branded product's sales. For example, several companies launched a generic to Lyrica® inJapan inDecember 2020 despite pending patent infringement litigation. While the litigation remains ongoing, the rate of generic conversion is significant and, combined with market dynamics relating to the COVID-19 pandemic, the Company expects a significant reduction in the annual revenues of Lyrica®. Certain markets in which we do business outside of theU.S. have undergone government-imposed price reductions, and further government-imposed price reductions are expected in the future. Such measures, along with the tender systems discussed below, are likely to have a negative impact on sales and gross profit in these markets. However, government initiatives in certain markets that appear to favor generic products could help to mitigate this unfavorable effect by increasing rates of generic substitution and penetration. Additionally, a number of markets in which we operate outside of theU.S. have implemented, or may implement, tender systems for generic pharmaceuticals in an effort to lower prices. Generally speaking, tender systems can have an unfavorable impact on sales and profitability. Under such tender systems, manufacturers submit bids that establish prices for generic pharmaceutical products. Upon winning the tender, the winning company will receive priority placement for a period of time. The tender system often results in companies underbidding one another by proposing low pricing in order to win the tender. The loss of a tender by a third party to whom we supply API can also have a negative impact on our sales and profitability. Sales continue to be negatively affected by the impact of tender systems in certain countries. Recent Developments 2020 Restructuring Program During the fourth quarter of 2020,Viatris announced a significant global restructuring program in order to achieve synergies and ensure that the organization is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers, and other stakeholders.Viatris' restructuring initiative incorporates and expands on the restructuring program announced by Mylan N.V. earlier in 2020 as part of its business transformation efforts. The Company expects to optimize its commercial capabilities and enabling functions, and close, downsize or divest up to 15 manufacturing facilities globally that are deemed to be no longer viable either due to surplus capacity, challenging market dynamics or a shift in its product portfolio toward more complex products. As a result,Viatris expects that up to 20% of its global workforce may be impacted upon completion of the restructuring initiative. For the committed restructuring actions, the Company expects to incur total pre-tax charges ranging between$1.1 billion and$1.4 billion . Such charges are expected to include between$350 million and$450 million of non-cash charges mainly related to accelerated depreciation and asset impairment charges, including inventory write-offs. The remaining estimated cash costs of between$750 million and$950 million are expected to be primarily related to severance and employee benefits expense, as well as other costs, including those related to contract terminations and decommissioning costs. In addition, management believes the potential annual savings related to these committed restructuring activities to be between$700 million and$900 million once fully implemented, with most of these savings expected to improve operating cash flow. Impact of the Coronavirus pandemic on our business and results of operations As a leading global pharmaceutical company,Viatris is committed to continue doing its part in support of public health needs amid the evolving COVID-19 pandemic. The Company's priorities remain protecting the health and safety of our workforce, continuing to produce critically needed medicines, deploying resources and expertise in the fight against COVID-19 through potential prevention and treatment efforts, supporting the communities in which we operate and maintaining the health of our overall business. The following section discusses the important measures the Company is taking in light of the COVID-19 pandemic. 48 -------------------------------------------------------------------------------- Table of ContentsEmployee Health and Safety •Viatris continues to align with government and health authority guidelines in an effort to safeguard our workforce and continues to make assessments on an ongoing basis.
•While Viatris' business operations are currently considered essential based on
government guidelines throughout the world due to the important role
pharmaceutical manufacturers play within the global healthcare system, many
•Because protecting the health and safety of our workforce remains paramount,Viatris has taken extra precautions at manufacturing facilities to aid in the protection of site personnel and operations, including the implementation of social distancing guidelines, daily health assessments and split shifts where feasible. •Many customer facing field personnel have moved to a remote engagement model to ensure continued support for healthcare professionals, patient care and access to needed products.
•Global restrictions have been placed on travel and in-person meetings.
•Viatris has taken steps to protect the safety of study participants, our employees and staff at clinical trial sites and ensure regulatory compliance and scientific integrity of trial data.
Continuing to Produce Critically Needed Medicines Manufacturing and Supply •Viatris has activated worldwide business continuity plans to seek to ensure that our global supply chain platform continues to operate without significant disruption. •All of our manufacturing facilities, and those of our key global partners, are currently operational and, at this time, we are not experiencing any significant disruptions to our supply chain, including the availability of APIs. Also, we are currently not experiencing any negative impact on our customer service levels. •Viatris has a broad, diverse and resilient global manufacturing and supply chain footprint. We are not dependent on any one country or site. Even inIndia , our manufacturing footprint is spread over five different states, which mitigates the risk of disruption in any given part of the country. •Viatris continues to engage with regulatory authorities around the worldwho are committed to maintaining ongoing regulatory processes while also continuing to make available our global R&D, regulatory and manufacturing expertise and capacity to partnerswho may be in need of additional resources.
Commercial Operations
•We have and continue to experience certain negative fluctuations in demand trends due to COVID-19. We will continue to monitor trends closely as we work to ensure patients have access to needed medicine.
•Inventory levels, both ours and those in our distribution channel, remain in-line with normal levels and are currently assessed to be sufficient for anticipated demand.
Deploying Resources and Expertise in the Fight Against COVID-19 Product Development
•OnMay 12, 2020 , Mylan announced a global collaboration with Gilead Sciences, Inc. to expand access to the investigational antiviral remdesivir for the potential treatment of COVID-19. Under the terms of the license agreement the Company has rights to manufacture and distribute remdesivir in 127 low-and middle-income countries, includingIndia . 49 -------------------------------------------------------------------------------- Table of Contents •OnJuly 6, 2020 , Mylan announced that the DCGI approved its remdesivir 100 mg/vial for restricted emergency use inIndia as part of the DCGI's accelerated approval process to address urgent, unmet needs amid the evolving COVID-19 pandemic. •OnNovember 20, 2020 , theWorld Health Organization issued a conditional recommendation against the use of remdesivir in hospitalized patients, regardless of disease severity, as there was no evidence that remdesivir improved survival and other outcomes in these patients. •Viatris has ramped up production of antiviral medicines, including remdesivir, and continues to work with government authorities inIndia to further reduce the cost of the medicines and educate more than 20,000 healthcare professionals about product usage as the country works to overcome its current COVID outbreak. Maintaining the Health of Our Overall Business
Access to Capital Markets and Liquidity
While currently we are not experiencing any negative liquidity trends related to the COVID-19 pandemic, we continue to closely monitor developments and the potential negative impact on our operating performance and our ability to access the capital markets. Due to the Company's ability to generate significant cash flows from operations, as well as its revolving credit agreement, other short-term borrowing facilities and access to capital markets, we believe that we currently have, and will maintain, the ability to meet foreseeable liquidity needs.
Impact on Results of Operations
The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption affecting the markets we serve, and has had a negative impact on our current year results of operations. The extent to which the COVID-19 pandemic will impact our business, operations and financial results in future periods will depend on numerous evolving factors that are beyond our control and that we may not be able to accurately predict. For additional information, see "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations." Financial Summary The table below is a summary of the Company's financial results for the three months endedMarch 31, 2021 compared to the prior year period: Three Months
Ended
March 31,
(In millions, except per share amounts) 2021 2020 Change % Change
Total revenues $ 4,430.3 $ 2,619.2 $ 1,811.1 69 %
Gross profit 1,127.3 906.1 221.2 24 %
(Loss) earnings from operations (266.2) 184.7 (450.9) (244) %
Net (loss) earnings (1,037.6) 20.8 (1,058.4) nm
Diluted (loss) earnings per share
nm
A detailed discussion of the Company's financial results can be found below in
the section titled "Results of Operations." As part of this discussion, we also
report sales performance using the non-GAAP financial measures of "constant
currency" net sales and total revenues. These measures provide information on
the change in net sales and total revenues assuming that foreign currency
exchange rates had not changed between the prior and current period. The
comparisons presented at constant currency rates reflect comparative local
currency sales at the prior year's foreign exchange rates. We routinely evaluate
our net sales and total revenues performance at constant currency so that sales
results can be viewed without the impact of foreign currency exchange rates,
thereby facilitating a period-to-period comparison of our operational
activities, and believe that this presentation also provides useful information
to investors for the same reason.
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More information about non-GAAP measures used by the Company as part of this
discussion, including adjusted cost of sales, adjusted gross margins, adjusted
net earnings and adjusted EBITDA (all of which are defined below) can be found
in "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Results of Operations - Use of Non-GAAP Financial
Measures."
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Results of Operations
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Three Months Ended
March 31,
2021 Constant Constant
2021 Currency Currency Currency %
(In millions) 2021 2020 % Change Impact (1) Revenues Change (2)
Net sales
Developed Markets $ 2,571.6 $ 1,986.4 29 % $ (96.9) $ 2,474.7 25 %
Greater China 591.9 15.1 nm 0.2 592.1 nm
JANZ 481.9 243.2 98 % (21.9) 460.0 89 %
Emerging Markets 754.7 343.5 120 % (0.3) 754.4 120 %
Total net sales $ 4,400.1 $ 2,588.2 70 % $ (118.9) $ 4,281.2 65 %
Other revenues (3) 30.2 31.0 (3) % (0.5) 29.7 (4) %
Consolidated total revenues (4) $ 4,430.3 $ 2,619.2 69 % $ (119.4) $ 4,310.9 65 %
____________
(1)Currency impact is shown as unfavorable (favorable).
(2)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 2021 constant currency
net sales or revenues to the corresponding amount in the prior year.
(3)For the three months ended March 31, 2021 , other revenues in Developed
Markets, Greater China , JANZ, and Emerging Markets were approximately $22.3
million , $1.4 million , $0.4 million , and $6.1 million , respectively.
(4)Amounts exclude intersegment revenue that eliminates on a consolidated basis.
Total Revenues
For the current quarter, Viatris reported total revenues of $4.43 billion ,
compared to $2.62 billion for the comparable prior year period, representing an
increase of $1.81 billion , or 69%. Total revenues include both net sales and
other revenues from third parties. Net sales for the current quarter were $4.40
billion , compared to $2.59 billion for the comparable prior year period,
representing an increase of $1.81 billion , or 70%. Other revenues for the
current quarter were $30.2 million , compared to $31.0 million for the comparable
prior year period.
The increase in total revenues and net sales was primarily driven by net sales
totaling $1.72 billion from the Upjohn Business in the current quarter and
approximately $163.2 million of new product sales, partially offset by a
decrease of approximately $191.5 million in net sales from existing products as
a result of lower pricing and volumes. New product sales include new products
launched in 2021 and the carryover impact of new products, including business
development, launched since April 1, 2020 . The Company's net sales were
favorably impacted by the effect of foreign currency translation, primarily
reflecting changes in the U.S. Dollar as compared to the currencies of
subsidiaries in countries within the EU and in Australia . The net favorable
impact of foreign currency translation on net sales was approximately $118.9
million , or 5%. On a constant currency basis, the increase in net sales was
approximately $1.69 billion , or 65% for the three months ended March 31, 2021 .
We estimate that the COVID-19 pandemic negatively impacted our first quarter
2021 net sales by approximately 3%, primarily driven by lower retail pharmacy
demand, as the Company experienced a positive impact on customer purchasing
patterns in the prior year which did not recur, lower non-COVID-19 related
patient hospital visits and a lower number of in person meetings with
prescribers.
From time to time, a limited number of our products may represent a significant
portion of our net sales, gross profit and net earnings. Our top ten products in
terms of net sales, in the aggregate, represented approximately 35% and 22% for
the three months ended March 31, 2021 and 2020, respectively, with the
year-over-year increase a result of the Combination. This percentage may
fluctuate based upon the timing of new product launches, seasonality and the
timing of changes in competition.
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Net sales are derived from our four reporting segments: Developed Markets,
Developed Markets Segment
Net sales from Developed Markets increased by$585.2 million or 29% during the three months endedMarch 31, 2021 when compared to the prior year period. Net sales withinNorth America totaled approximately$1.20 billion and net sales withinEurope totaled approximately$1.37 billion . This increase was due primarily to net sales from the Upjohn Business in the current quarter of$533.4 million and new product sales. This increase was partially offset by lower volumes primarily driven by the impact of products divested in 2020 as a result of the Combination and higher sales in the prior year period related to customer purchasing patterns inEurope due to COVID-19 related uncertainties, partially offset by higher volumes inNorth America of EpiPen® Auto-Injector and biosimilar products. Lower pricing on net sales of existing products also partially offset the overall increase in net sales, and was driven by changes in the competitive environment, including for Levothyroxine Sodium. The favorable impact of foreign currency translation on current period net sales was approximately$96.9 million , or 5%. Constant currency net sales increased by approximately$488.3 million , or 25% when compared to the prior year period. Greater China Segment Net sales fromGreater China increased by$576.8 million for the three months endedMarch 31, 2021 when compared to the prior year period. This increase was the result of net sales from the Upjohn Business in the current quarter of$592.0 million . This was partially offset by lower net sales of existing products, driven by lower volumes, and to a lesser extent, lower pricing. Volumes on net sales of existing products were negatively impacted by competitive market conditions, including VBP. The unfavorable impact of foreign currency translation was approximately$0.2 million , or 1%. Constant currency net sales increased by approximately$577.0 million when compared to the prior year. JANZ Segment Net sales from JANZ increased by$238.7 million or 98% for the three months endedMarch 31, 2021 when compared to the prior year. This increase was the result of net sales from the Upjohn Business in the current quarter of$189.6 million , higher net sales of existing products driven by higher volumes inJapan , the favorable impact of foreign currency translation, and to a lesser extent, new product sales inJapan . These increases were partially offset by lower pricing on net sales of existing products. Higher volumes from net sales of existing products were due to higher sales inJapan of Amitiza, Lipacreon, and the EpiPen® Auto-Injector. Foreign currency translation had a favorable impact of approximately$21.9 million , or 9%. Constant currency net sales increased by approximately$216.8 million , or 89% when compared to the prior year period. Emerging Markets Segment Net sales from Emerging Markets increased by$411.2 million or 120% for the three months endedMarch 31, 2021 when compared to the prior year period. This increase was the result of net sales from the Upjohn Business in the current quarter of$406.2 million and new product sales. These increases were partially offset by lower net sales of existing products, driven by lower volumes, and to a lesser extent, lower pricing. The favorable impact of foreign currency translation was$0.3 million , or less than 1%. Constant currency net sales increased by approximately$410.9 million , or 120%. Cost of Sales and Gross Profit Cost of sales increased from$1.71 billion for the three months endedMarch 31, 2020 to$3.30 billion for the three months endedMarch 31, 2021 . Cost of sales was primarily impacted by purchase accounting related amortization of acquired intangible assets and other special items, which are described further in the section titled Use of Non-GAAP Financial Measures. Gross profit for the three months endedMarch 31, 2021 was$1.13 billion and gross margins were 25%. For the three months endedMarch 31, 2020 , gross profit was$906.1 million and gross margins were 35%. Cost of sales from the Upjohn Business, including the impact of amortization expense, was$1.23 billion for the three months endedMarch 31, 2021 . This includes increased amortization expense of$777.7 million primarily for purchase accounting related amortization of intangible assets and the step-up of acquired inventory. Gross profit from net sales of existing products were impacted equally by lower volumes and lower pricing. Adjusted gross margins were 60% for the three months endedMarch 31, 2021 , compared to 53% for the three months endedMarch 31, 2020 , with the year-over-year increase driven by the impact of the Combination. 53
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Table of Contents A reconciliation between cost of sales, as reported underU.S. GAAP, and adjusted cost of sales and adjusted gross margin for the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 is as follows: Three Months Ended March 31, (In millions) 2021 2020 U.S. GAAP cost of sales$ 3,303.0 $ 1,713.1 Deduct:
Purchase accounting related amortization (1,255.0) (352.2) Acquisition related items
(2.5) (0.8)
Restructuring related costs (167.8) (3.7)
Share-based compensation expense (0.6) (0.3)
Other special items (86.7) (117.3)
Adjusted cost of sales $ 1,790.4 $ 1,238.8
Adjusted gross profit (a) $ 2,639.9 $ 1,380.4
Adjusted gross margin (a) 60 % 53 %
____________
(a)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.
Operating Expenses
Research & Development Expense
R&D expense for the three months ended March 31, 2021 was $184.1 million ,
compared to $114.2 million for the comparable prior year period, an increase of
$69.9 million . This increase was primarily due to costs associated with the
Upjohn Business of $35.8 million and increased costs for inventory validation
batches for certain products under development.
Selling, General & Administrative Expense
SG&A expense for the current quarter was $1.19 billion , compared to $605.4
million for the comparable prior year period, an increase of $581.1 million . The
increase was primarily due to costs related to the Upjohn Business of $436.4
million , and an increase of approximately $137.5 million for restructuring costs
due to the implementation of the 2020 restructuring program and an approximately
$35.0 million increase related to acquisition related costs. Partially
offsetting these increases were lower selling and promotional expenses,
including through our active management related to synergies and certain lower
expenses as a result of COVID-19.
Litigation Settlements and Other Contingencies, Net
During the three months ended March 31, 2021 and 2020, the Company recorded a
net charge of $22.9 million and $1.8 million , respectively.
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The following table includes the losses/(gains) recognized in litigation
settlements and other contingencies, net during the three months ended March 31,
2021 and March 31, 2020 :
Three Months Ended
March 31,
(In millions) 2021 2020Respiratory delivery platform contingent consideration adjustment $
9.1 $ 6.6
Litigation settlements, net 13.8 (4.8)
Total litigation settlements and other contingencies, net $
22.9
During the three months endedMarch 31, 2021 , the Company recorded a$9.1 million loss for fair value adjustments related to the respiratory delivery platform contingent consideration. In addition, the Company recognized litigation related charges of$13.8 million . During the three months endedMarch 31, 2020 , the Company recorded a$6.6 million loss for fair value adjustments related to the respiratory delivery platform contingent consideration. Partially offsetting this item was a net gain of approximately$4.8 million . Interest Expense Interest expense for the three months endedMarch 31, 2021 totaled$169.0 million , compared to$119.9 million for the three months endedMarch 31, 2020 , an increase of$49.1 million . The increase is due to the interest expense related to the additional debt assumed in the Combination of approximately$75.6 million , partially offset by amortization of debt premium of$17.2 million and by the impact of debt repayments in 2020. Other Expense, Net Other expense, net was$6.1 million for the three months endedMarch 31, 2021 , compared to$34.1 million for the comparable prior year period. Other expense, net includes losses from equity affiliates, foreign exchange gains and losses and interest and dividend income. Other expense, net was comprised of the following for the three months endedMarch 31, 2021 and 2020, respectively: Three Months Ended March 31, (In millions) 2021 2020
Losses from equity affiliates, primarily clean energy investments
$ 17.3 Foreign exchange (gains) losses, net (0.2) 13.6 Other (gains) losses, net (11.6) 3.2 Other expense, net$ 6.1 $ 34.1 Income Tax Provision For the three months endedMarch 31, 2021 , the Company recognized an income tax provision of$596.3 million , compared to an income tax provision of$9.9 million for the comparable prior year period, an increase of$586.4 million . The income tax provision for the three months endedMarch 31, 2021 was negatively impacted by the tax rates applied to the reversal of intercompany profit in inventory reserve which was recorded on the opening balance sheet as part of Combination. This reserve eliminates the profit in inventory related to intercompany transactions and changes to this reserve occur as products are sold to third parties. Also impacting the current year income tax provision was the changing mix of income earned in jurisdictions with differing tax rates. 55 -------------------------------------------------------------------------------- Table of Contents Use of Non-GAAP Financial Measures Whenever the Company uses non-GAAP financial measures, we provide a reconciliation of the non-GAAP financial measures to their most directly comparableU.S. GAAP financial measure. Investors and other readers are encouraged to review the relatedU.S. GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparableU.S. GAAP measure and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance withU.S. GAAP. Additionally, since these are not measures determined in accordance withU.S. GAAP, non-GAAP financial measures have no standardized meaning across companies, or as prescribed byU.S. GAAP and, therefore, may not be comparable to the calculation of similar measures or measures with the same title used by other companies. Management uses these measures internally for forecasting, budgeting, measuring its operating performance, and incentive-based awards. Primarily due to acquisitions and other significant events which may impact comparability of our periodic operating results, we believe that an evaluation of our ongoing operations (and comparisons of our current operations with historical and future operations) would be difficult if the disclosure of our financial results was limited to financial measures prepared only in accordance withU.S. GAAP. We believe that non-GAAP financial measures are useful supplemental information for our investors and when considered together with ourU.S. GAAP financial measures and the reconciliation to the most directly comparableU.S. GAAP financial measure, provide a more complete understanding of the factors and trends affecting our operations. The financial performance of the Company is measured by senior management, in part, using adjusted metrics as described below, along with other performance metrics. The Company's use of such non-GAAP measures is governed by an adjusted reporting policy maintained by the Company and such non-GAAP measures are reviewed in detail with the Audit Committee of the Board of Directors. Adjusted Cost of Sales and Adjusted Gross Margin We use the non-GAAP financial measure "adjusted cost of sales" and the corresponding non-GAAP financial measure "adjusted gross margin." The principal items excluded from adjusted cost of sales include restructuring, acquisition related and other special items and purchase accounting related amortization, which are described in greater detail below. Adjusted Net Earnings Adjusted net earnings is a non-GAAP financial measure and provides an alternative view of performance used by management. Management believes that, primarily due to acquisition activity and other significant events, an evaluation of the Company's ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance withU.S. GAAP. Management believes that adjusted net earnings is an important internal financial metric related to the ongoing operating performance of the Company, and is therefore useful to investors and that their understanding of our performance is enhanced by this measure. Actual internal and forecasted operating results and annual budgets used by management include adjusted net earnings. EBITDA and Adjusted EBITDA EBITDA and adjusted EBITDA are non-GAAP financial measures that the Company believes are appropriate to provide additional information to investors to demonstrate the Company's ability to comply with financial debt covenants and assess the Company's ability to incur additional indebtedness. The Company also believes that adjusted EBITDA better focuses management on the Company's underlying operational results and true business performance and, is used, in part, for management's incentive compensation. We calculate "EBITDA" asU.S. GAAP net earnings (loss) adjusted for net contribution attributable to equity method investments, income tax provision (benefit), interest expense and depreciation and amortization. EBITDA is further adjusted for share-based compensation expense, litigation settlements and other contingencies, net, and restructuring and other special items to determine "adjusted EBITDA". These adjustments are generally permitted under our credit agreement in calculating Adjusted EBITDA for determining compliance with our debt covenants. The significant items excluded from adjusted cost of sales, adjusted net earnings, and adjusted EBITDA include: 56 -------------------------------------------------------------------------------- Table of Contents Purchase Accounting Amortization and Other Related Items The ongoing impact of certain amounts recorded in connection with acquisitions of both businesses and assets is excluded from adjusted cost of sales, adjusted net earnings, and adjusted EBITDA. These amounts include the amortization of intangible assets, inventory step-up, property, plant and equipment step-up, and intangible asset impairment charges, including for in-process research and development. For the acquisition of businesses accounted for under the provisions of ASC 805, Business Combinations, these purchase accounting impacts are excluded regardless of the financing method used for the acquisitions, including the use of cash, long-term debt, the issuance of common stock, contingent consideration or any combination thereof. Upfront and Milestone-Related R&D Expenses These expenses and payments are excluded from adjusted net earnings and adjusted EBITDA because they generally occur at irregular intervals and are not indicative of the Company's ongoing operations. Accretion of Contingent Consideration Liability and Other Fair Value Adjustments The impact of changes to the fair value of contingent consideration and accretion expense are excluded from adjusted net earnings and adjusted EBITDA because they are not indicative of the Company's ongoing operations due to the variability of the amounts and the lack of predictability as to the occurrence and/or timing and management believes their exclusion is helpful to understanding the underlying, ongoing operational performance of the business. Share-based Compensation Expense Share-based compensation expense is excluded from adjusted net earnings and adjusted EBITDA. Our share-based compensation programs have become increasingly weighted toward performance-based compensation, which leads to variability and to a lack of predictability as to the occurrence and/or timing of amounts incurred. As such, management believes the exclusion of such amounts on an ongoing basis is helpful to understanding the underlying operational performance of the business. Restructuring, Acquisition Related and Other Special Items Costs related to restructuring, acquisition and integration activities and other actions are excluded from adjusted cost of sales, adjusted net earnings and adjusted EBITDA, as applicable. These amounts include items such as: •Costs related to formal restructuring programs and actions, including costs associated with facilities to be closed or divested, employee separation costs, impairment charges, accelerated depreciation, incremental manufacturing variances, equipment relocation costs, decommissioning and other restructuring related costs; •Certain acquisition related remediation and integration and planning costs, as well as other costs associated with acquisitions such as advisory and legal fees, certain financing related costs, certain reimbursements related to the Company's obligation to reimburse Pfizer for certain financing and transaction related costs under the Business Combination Agreement and Separation and Distribution Agreement, certain otherTSA related exit costs, and other business transformation and/or optimization initiatives, which are not part of a formal restructuring program, including employee separation and post-employment costs; •The pre-tax loss of the Company's clean energy investments, whose activities qualify for income tax credits under the Code; only included in adjusted net earnings is the net tax effect of the entity's activities; •Other costs, incurred from time to time, related to certain special events or activities that lead to gains or losses, including, but not limited to, incremental manufacturing variances, asset write-downs, or liability adjustments; •Certain costs to further develop and optimize our global enterprise resource planning systems, operations and supply chain; and •The impact of changes related to uncertain tax positions and certain impacts related to the Combination are excluded from adjusted net earnings. In addition, tax adjustments to adjusted earnings are recorded to present items on an after-tax basis consistent with the presentation of adjusted net earnings. The Company has undertaken restructurings and other optimization initiatives of differing types, scope and amount during the covered periods and, therefore, these charges should not be considered non-recurring; however, management 57 -------------------------------------------------------------------------------- Table of Contents excludes these amounts from adjusted net earnings and adjusted EBITDA because it believes it is helpful to understanding the underlying, ongoing operational performance of the business. Litigation Settlements, Net Charges and gains related to legal matters, such as those discussed in Note 18 Litigation included in Part I, Item 1 of this Form 10-Q are generally excluded from adjusted net earnings and adjusted EBITDA. Normal, ongoing defense costs of the Company made in the normal course of our business are not excluded. Reconciliation ofU.S. GAAP Net (Loss) Earnings to Adjusted Net Earnings A reconciliation between net (loss) earnings as reported underU.S. GAAP, and adjusted net earnings for the periods shown follows: Three Months Ended March 31, (In millions) 2021 2020 U.S. GAAP net (loss) earnings$ (1,037.6) $ 20.8
Purchase accounting related amortization (primarily included in cost of sales) (a)
1,255.0 352.2
Litigation settlements and other contingencies, net 22.9 1.8
Interest expense (primarily amortization of premiums and discounts on long term debt)
(13.3) 5.8
Clean energy investments pre-tax loss 17.9 17.3
Acquisition related costs (primarily included in SG&A) (b) 59.8 23.2
Restructuring related costs (c) 315.4 7.6
Share-based compensation expense 32.7 19.4
Other special items included in:
Cost of sales (d) 86.7 117.3
Research and development expense (e) 14.7 1.7
Selling, general and administrative expense 19.3 (3.4)
Other expense, net - (0.4)
Tax effect of the above items and other income tax related
items (f) 342.9 (96.1)
Adjusted net earnings $ 1,116.4 $ 467.2
Significant items include the following:
(a)For the three months ended March 31, 2021 includes amortization of the
purchase accounting inventory fair value adjustment related to the Combination
totaling approximately $476.4 million .
(b)Acquisition related costs consist primarily of transaction costs including
legal and consulting fees and integration activities. Refer to SG&A discussion
within the section "Three Months Ended March 31, 2021 Compared to Three Months
Ended March 31, 2020 ".
(c)For the three months ended March 31, 2021 charges of approximately $167.8
million are included in cost of sales, approximately $6.4 million are included
in R&D, and approximately $141.2 million are included in SG&A. Refer to Note 15
Restructuring included in Part I, Item 1 of this Form 10-Q for additional
information.
(d)Costs incurred during the three months ended March 31, 2021 includes
incremental manufacturing variances and site remediation activities as a result
of the activities at the Company's Morgantown plant of approximately $45.0
million . Costs incurred during the three months ended March 31, 2020 primarily
relate to incremental manufacturing variances and site remediation activities as
a result of the activities at the Company's Morgantown plant of approximately
$58.8 million . In addition, the prior year period includes approximately $25.0
million related to a special bonus for plant employees as a result of the
COVID-19 pandemic.
(e)Adjustments primarily relate to non-refundable payments related to
development collaboration agreements.
(f)Adjusted for changes for uncertain tax positions and for certain impacts of
the Combination.
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Reconciliation of U.S. GAAP Net (Loss) Earnings to EBITDA and Adjusted EBITDA
Below is a reconciliation of U.S. GAAP net (loss) earnings to EBITDA and
adjusted EBITDA for the three months ended March 31, 2020 compared to the prior
year period:
Three Months Ended March 31,
(In millions) 2021 2020
U.S. GAAP net (loss) earnings $ (1,037.6) $ 20.8
Add adjustments:
Net contribution attributable to equity method investments 17.9 17.3
Income tax provision 596.3 9.9
Interest expense (a) 169.0 119.9
Depreciation and amortization (b) 1,422.5 415.0
EBITDA $ 1,168.1 $ 582.9
Add adjustments:
Share-based compensation expense 32.7 19.4
Litigation settlements and other contingencies, net 22.9 1.8
Restructuring, acquisition related and other special items (c) 412.9 146.6
Adjusted EBITDA $ 1,636.6 $ 750.7 (a) Includes amortization of premiums and discounts on long-term debt.
(b) Includes purchase accounting related amortization.
(c) See items detailed in the Reconciliation of
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Liquidity and Capital Resources Our primary source of liquidity is net cash provided by operating activities, which was$848.8 million for the three months endedMarch 31, 2021 . We believe that net cash provided by operating activities and available liquidity will continue to allow us to meet our needs for working capital, capital expenditures, interest and principal payments on debt obligations, and dividend payments. Nevertheless, our ability to satisfy our working capital requirements and debt service obligations, fund planned capital expenditures, or dividend payments, will substantially depend upon our future operating performance (which will be affected by prevailing economic conditions), and financial, business and other factors, some of which are beyond our control. Operating Activities Net cash provided by operating activities increased by$557.7 million to$848.8 million for the three months endedMarch 31, 2021 , as compared to net cash provided by operating activities of$291.1 million for the three months endedMarch 31, 2020 . Net cash provided by operating activities is derived from net (loss) earnings adjusted for non-cash operating items, gains and losses attributed to investing and financing activities and changes in operating assets and liabilities resulting from timing differences between the receipts and payments of cash, including changes in cash primarily reflecting the timing of cash collections from customers, payments to vendors and employees and tax payments in the ordinary course of business. [[Image Removed: vtrs-20210331_g1.jpg]] Net cash provided by operating activities was favorably impacted in the current year period by higher net revenues of the combined company, when compared to the prior year period, along with the timing of working capital cash flows, particularly the increase in net cash provided by changes in the income taxes payable of$483.8 million and net cash provided by changes in accounts payable of$392.9 million . These impacts were partially offset by restructuring and acquisition-related cash expenses. Investing Activities Net cash provided by investing activities was$236.3 million for the three months endedMarch 31, 2021 , as compared to net cash used in investing activities of$145.6 million for the three months endedMarch 31, 2020 , a net increase of$381.9 million . [[Image Removed: vtrs-20210331_g2.jpg]] 60 -------------------------------------------------------------------------------- Table of Contents In 2021, significant items in investing activities included the following: •cash received from acquisitions, net totaling approximately$277.0 million related to additional target cash balances received from Pfizer subsequent to the closing of the Combination; and •capital expenditures, primarily for equipment and facilities, totaling approximately$49.5 million . While there can be no assurance that current expectations will be realized, capital expenditures for the 2021 calendar year are expected to be approximately$500 million to$650 million . In 2020, significant items in investing activities included the following: •payments for product rights and other, net totaling approximately$67.1 million , primarily related to deferred non-contingent purchase payments for the acquisition of intellectual property rights and marketing authorizations in prior periods; and •capital expenditures, primarily for equipment and facilities, totaling approximately$43.4 million . Financing Activities Net cash used in financing activities was$1,099.8 million for the three months endedMarch 31, 2021 , as compared to$24.8 million for the three months endedMarch 31, 2020 , a net increase of$1,075.0 million . [[Image Removed: vtrs-20210331_g3.jpg]] In 2021, significant items in financing activities included the following: •net repayments of short-term borrowings of$1.06 billion ; and •milestone payments totaling approximately$26.0 million related to the respiratory delivery platform contingent consideration. In 2020, significant items in financing activities included the following: •payments totaling$19.3 million of the$24.3 million in milestone payments related to the respiratory delivery platform contingent consideration. The remaining payments related to the respiratory delivery platform contingent consideration are included as a component of other operating assets and liabilities, net within net cash from operating activities. Capital Resources Our cash and cash equivalents totaled$806.9 million atMarch 31, 2021 , and the majority of these funds are held by our non-U.S. subsidiaries. The Company anticipates having sufficient liquidity, including existing borrowing capacity under the Revolving Facility, Commercial Paper Program and the Receivables Facility and the Note Securitization Facility combined with cash to be generated from operations, to fund foreseeable cash needs without requiring the repatriation of non-U.S. cash. The Company has access to$4.0 billion under the Revolving Facility which matures inNovember 2023 . Up to$1.65 billion of the Revolving Facility may be used to support borrowings under our Commercial Paper Program. In addition to the Revolving Facility, MPI, a wholly owned subsidiary of the Company, has access to$400 million under the Receivables Facility, which expires inApril 2022 . As ofMarch 31, 2021 , the Company had no amounts outstanding under the Receivables Facility. 61 -------------------------------------------------------------------------------- Table of Contents InAugust 2020 , the Company entered into the Note Securitization Facility for borrowings up to$200 million . Under the terms of each of the Receivables Facility and Note Securitization Facility, certain of our accounts receivable secure the amounts borrowed and cannot be used to pay our other debts or liabilities. The amount that we may borrow at a given point in time is determined based on the amount of qualifying accounts receivable that are present at such point in time. Borrowings outstanding under the Receivables Facility bear interest at a commercial paper rate plus 0.925% and under the Note Securitization Facility at a rate per annum quoted from time to time byMUFG Bank, Ltd. plus 1.00% and are included as a component of short-term borrowings, while the accounts receivable securing these obligations remain as a component of accounts receivable, net, in our condensed consolidated balance sheets. In addition, the agreements governing the Receivables Facility and Note Securitization Facility contain various customary affirmative and negative covenants, and customary default and termination provisions. We have entered into accounts receivable factoring agreements with financial institutions to sell certain of our non-U.S. accounts receivable. These transactions are accounted for as sales and result in a reduction in accounts receivable because the agreements transfer effective control and risk related to the receivables over to the buyers. Our factoring agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold. We derecognized$114.5 million and$153.0 million of accounts receivable as ofMarch 31, 2021 andDecember 31, 2020 under these factoring arrangements, respectively. AtMarch 31, 2021 , our long-term debt, including the current portion, totaled$24.36 billion , as compared to$24.69 billion atDecember 31, 2020 . Total long-term debt is calculated net of deferred financing fees which were$46.9 million and$49.2 million atMarch 31, 2021 andDecember 31, 2020 , respectively. For additional information regarding our debt and debt agreements refer to Note 12 Debt in Part I, Item 1 of this Form 10-Q. OnMay 7, 2021 , the Company's Board of Directors declared a quarterly cash dividend of$0.11 per share on the Company's issued and outstanding common stock. The cash dividend will be payable onJune 16, 2021 to shareholders of record as of the close of business onMay 24, 2021 . The declaration and payment of future dividends to holders of the Company's common stock will be at the discretion of the Board of Directors, and will depend upon factors, including but not limited to, the Company's financial condition, earnings, capital requirements of its businesses, legal requirements, regulatory constraints, industry practice, and other factors that the Board of Directors deems relevant. We are continuously evaluating the potential acquisition of products, as well as companies, as a strategic part of our future growth. Consequently, we may utilize current cash reserves or incur additional indebtedness to finance any such acquisitions, which could impact future liquidity. Also, on an ongoing basis, we review our operations including the evaluation of potential divestitures of products and businesses as part of our future strategy. Any divestitures could impact future liquidity. In addition, we plan to continue to explore various ways to create, enhance or otherwise unlock the value of the Company's unique global platform in order to create shareholder value. Long-term Debt Maturity Mandatory minimum repayments remaining on the outstanding notional amount of long-term debt atMarch 31, 2021 was as follows for each of the periods endingDecember 31 : [[Image Removed: vtrs-20210331_g4.jpg]] The Company's Revolving Facility contains customary affirmative covenants for facilities of this type, including among others, covenants pertaining to the delivery of financial statements, notices of default and certain material events, maintenance of corporate existence and rights, property, and insurance and compliance with laws, as well as customary 62 -------------------------------------------------------------------------------- Table of Contents negative covenants for facilities of this type, including limitations on the incurrence of subsidiary indebtedness, liens, mergers and certain other fundamental changes, investments and loans, acquisitions, transactions with affiliates, payments of dividends and other restricted payments and changes in our lines of business. The maximum leverage ratio under the Revolving Facility is 4.25 to 1.00 for the first four full fiscal quarters following the close of the Combination and 3.75 to 1.00 thereafter, except in circumstances as defined in the Revolving Facility. The Company is in compliance atMarch 31, 2021 and expects to remain in compliance for the next twelve months. Supplemental Guarantor Financial Information Subsequent to the Combination,Utah Acquisition Sub Inc. is the issuer of the 3.150% Senior Notes due 2021, 3.950% Senior Notes due 2026 and 5.250% Senior Notes due 2046 (collectively, the "Utah Senior Notes"), which are fully and unconditionally guaranteed on a senior unsecured basis byMylan Inc. ,Viatris Inc. andMylan II B.V. Mylan Inc. is the issuer of the 4.200% Senior Notes due 2023, 4.550% Senior Notes due 2028, 5.400% Senior Notes due 2043 and 5.200% Senior Notes due 2048 (collectively, the "Mylan Inc. Senior Notes" and, together with the Utah Senior Notes, the "Senior Notes"), which are fully and unconditionally guaranteed on a senior unsecured basis byMylan II B.V. ,Viatris Inc. andUtah Acquisition Sub Inc. The respective obligations ofViatris Inc. ,Mylan Inc. ,Utah Acquisition Sub Inc. , andMylan II B.V. as guarantors of the Senior Notes, as applicable, are senior unsecured obligations of the applicable guarantor and rank pari passu in right of payment with all of such guarantor's existing and future senior unsecured obligations that are not expressly subordinated to such guarantor's guarantee of the applicable series of Senior Notes, rank senior in right of payment to any future obligations of such guarantor that are expressly subordinated to such guarantor's guarantee of the applicable series of Senior Notes, and are effectively subordinated to such guarantor's existing and future secured obligations to the extent of the value of the collateral securing such obligations. The respective obligations ofViatris Inc. ,Mylan Inc. ,Utah Acquisition Sub Inc. , andMylan II B.V. as guarantors of the Senior Notes, as applicable, are structurally subordinated to all of the existing and future liabilities, including trade payables, of the existing and future subsidiaries of such guarantor that do not guarantee the applicable series of Senior Notes. The guarantees byViatris Inc. ,Mylan Inc. andMylan II B.V. of the Utah Senior Notes will terminate under the following customary circumstances: (1) a sale or disposition ofMylan Inc. in a transaction that complies with the applicable indenture such thatMylan Inc. ceases to be a subsidiary ofViatris Inc. ? (2) legal defeasance or covenant defeasance, each as described in the applicable indenture, or ifUtah Acquisition Sub Inc.'s obligations under the applicable indenture are discharged? or (3) the earlier to occur of (i) the release of their respective guarantees under all applicableMylan Inc. debt and (ii)Mylan Inc. no longer having any obligations in respect of anyMylan Inc. debt. The guarantee obligations ofViatris Inc. ,Mylan Inc. ,Utah Acquisition Sub Inc. , andMylan II B.V. under the Senior Notes are subject to certain limitations and terms similar to those applicable to other guarantees of similar instruments, including that (i) the guarantees are subject to fraudulent transfer and conveyance laws and (ii) each guarantee is limited in amount to an amount not to exceed the maximum amount that can be guaranteed by the applicable guarantor without rendering the guarantee, as it relates to such guarantor, voidable under applicable fraudulent transfer and conveyance laws or similar laws affecting the rights of creditors generally. The following table presents unaudited summarized financial information ofViatris Inc. ,Mylan Inc. ,Utah Acquisition Sub Inc. , andMylan II B.V. on a combined basis as of and for the three months endedMarch 31, 2021 and as of and for the year endedDecember 31, 2020 . All intercompany balances have been eliminated in consolidation. This unaudited combined summarized financial information is presented utilizing the equity method of accounting. 63
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