Summary of Viatris Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenues: $3.8 billion, up 3.5% year-over-year on an operational basis.

Adjusted EBITDA: $1.2 billion.

Adjusted EPS: $0.69 per share.

Free Cash Flow: Generated $329 million during the quarter, $449 million excluding certain costs.

Gross Margin: Adjusted gross margin improved to 57.5%.

Capital Returned to Shareholders: Approximately $550 million through dividends and share repurchases.

2Strategic Updates and Business Highlights

Growth Drivers: Strong performance in Greater China (16% revenue growth) and North America, particularly in complex generics and transdermal products.

Regulatory Approvals: Received U.S. approval for Gwyn Lo, a transdermal contraceptive patch, with plans for launch later this year. Fast-acting meloxicam is under FDA review.

Pipeline Progress: Positive Phase III results for Nefecon in Japan; ongoing development of selatogrel and cenerimod with expected readouts in 2027.

Divestiture: Agreement to sell global rights to Tyrvaya, marking a strategic shift away from eye care.

3Forward Guidance and Outlook

Updated Financial Guidance: Midpoint raised for total revenues, adjusted EBITDA, and adjusted EPS for 2026, reflecting strong first-half performance.

Expectations for Second Half: Anticipated revenue growth moderation due to supply disruptions and competitive pressures, particularly in North America and emerging markets.

Projected Revenue Impact: Supply disruptions from the Nashik facility expected to impact revenues by $100 million to $150 million in the second half.

4Challenges and Points of Concern

Supply Chain Issues: Ongoing disruptions at the Nashik facility following a fire and FDA inspection observations, leading to anticipated revenue impacts.

Competitive Pressures: Facing increased competition in North America, particularly for high-margin products like Breyna and Wixela.

Emerging Market Declines: Net sales in emerging markets declined 2% year-over-year, primarily due to supply constraints affecting lower-margin ARV generics.

5Notable Q&A Insights

China Market Dynamics: E-commerce contributes 10-15% of revenue; growth expected to moderate due to new procurement policies affecting hospital channels.

Pipeline Potential: Fast-acting meloxicam has significant market potential, with peak sales estimates up to $500 million; selatogrel's study is powered for a 20% risk reduction, with a minimum acceptable benefit of 10-15%.

M&A Environment: Active market with numerous assets available; Viatris remains disciplined in pursuing in-market accretive opportunities.

Background Therapy in Trials: Cenerimod trial allows background Benlysta, but expected to be limited to 5% of patients, ensuring minimal impact on data integrity. Overall, Viatris demonstrated solid financial performance in Q2 2026, with strategic initiatives aimed at long-term growth, though challenges related to supply chain disruptions and competitive pressures remain. The company is optimistic about its pipeline and market opportunities, particularly in China and with new product launches.