What happened
Shares of Viatris (NASDAQ: VTRS) fell 24.4% in February, according to data provided by S&P Global Market Intelligence. The stock has since fallen even further.
So what
The healthcare stock's big drop on Feb. 28 came after the company announced in its fourth-quarter earnings report that it was selling its biosimilars portfolio to Biocon Biologics, a privately held company in India, for up to $3.335 billion. Investors didn't like the move because it took out a potential driver of income. The company said it made the move to focus on some of its early-stage therapies.
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Viatris, formed by the merger of the Upjohn generic drug division of Pfizer with generic-drug maker Mylan, lost money in its first full year as a company.
Viatris reported a net loss of $263.8 million in the fourth quarter, a per-share loss of $0.22. The company grew revenue in the quarter to $4.331 billion, up 21% year over year. For the full year, it reported revenue of $17.8 billion, down 3% on an operational basis, and it had a loss for the year of $1.269 billion, compared to a loss of $699.9 million last year.
It also didn't help allay concerns when it predicted that 2022 revenue will decline to a range of $17 billion to $17.5 billion.
Now what
Some investors might look at the stock's dip as an opportunity, despite its losses. The company offers a quarterly dividend that just increased by 9%, for a yield of 4.48%. And the payout looks well covered with a payout ratio of 15.91%.
Its low price-to-sales ratio of 0.678 makes it a bargain, especially considering that the company only needs to cut costs to become profitable. Revenue should increase once it launches generics for blood-clot preventers Xarelto and Eliquis, which had $12.6 billion and $20.2 billion in worldwide sales last year, respectively, and for Revlimid, which slows tumor growth and had $6.6 billion in sales last year.
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Jim Halley owns Pfizer and Viatris Inc. The Motley Fool recommends Viatris Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
