Shares of Viatris Inc. VTRS were down 14.9% after it issued a lackluster outlook for 2021.
We remind investors that Viatris was formed in November 2020 through the combination of Mylan and Pfizer's PFE Upjohn business.
The company expects revenues of $17.2-$17.8 billion in 2021. Management stated that 2021 will be a tough year in terms of revenues, adjusted EBITDA and free cash flow, particularly due to a delay in the closing of the merger of Mylan and Pfizer's Upjohn business.
In December 2020, Viatris announced that it expects to optimize its commercial capabilities and close, downsize or divest up to 15 manufacturing facilities globally that it believes are no longer viable either due to surplus capacity, challenging market dynamics or a shift in its portfolio toward more complex products. Consequently, 20% of its global workforce of approximately 45,000 is likely to be affected upon the completion of the restructuring initiative.
The initiative was intended to reduce the company's cost base by at least $1 billion by the end of 2024. Viatris now stated that these cost synergies will be achieved in three years.
The company also announced that it will pay an annualized dividend of approximately $540 million, or $0.44 per share. However, due to the timing of the initiation of the dividend, it expects to make three payments in 2021 totaling approximately $400 million. Viatris expects the first quarterly dividend of $0.11 per share to be declared in May 2021 and distributed in June 2021, subject to the board's first-quarter 2021 review.
It also expects to repay approximately $6.5 billion in debt by the end of 2023.
Shares of Viatris have declined 17.3% in the year so far against the industry’s growth of 8.4%.
A slowdown in the generics business has forced Mylan to look for strategic options. The combined entity will focus more on emerging markets to counter the slowdown in developed markets.
Zacks Rank & Stocks to Consider
Viatris currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the healthcare space are Repligen RGEN and Dynavax Technologies Corporation DVAX, both carrying a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Repligen’s earnings per share estimates have moved up from $1.63 to $1.66 for 2021 in the past 90 days.
Dynavax loss per share estimates have narrowed to 17 cents from 45 cents in the past 30 days.
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