Viatris Inc

Previous wording

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 in Viatris’ 2023 Form 10-K, the unaudited interim financial statements and related Notes included in Part I — Item 1 of this Form 10-Q and our other SEC filings and public disclosures. The interim results of operations and comprehensive loss for the three and nine months ended September 30, 2024, and cash flows for the nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.

Current wording

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 in Viatris’ 2024 Form 10-K, the unaudited interim financial statements and related Notes included in Part I — Item 1 of this Form 10-Q and our other SEC filings and public disclosures. The interim results of operations and comprehensive loss for the three months ended March 31, 2025, and cash flows for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.

Previous wording

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 aboutthe goals or outlooks with respect to the Company’s strategic initiatives, including but not limited to the Company’s two-phased strategic vision and potential, announced and completed divestitures, acquisitions or other transactions; the benefits and synergies of such divestitures, acquisitions, or other transactions, or restructuring programs; 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 and payments, stock repurchases, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, commitments, confidence in future results, 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:

Current wording

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 aboutthe goals or outlooks with respect to the Company’s strategic initiatives and priorities, including but not limited to divestitures, acquisitions, strategic alliances, collaborations, or other potential transactions; the benefits and synergies of such divestitures, acquisitions, strategic alliances, collaborations, or other transactions, or restructuring programs; 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 and payments, share repurchases, debt ratio and covenants, anticipated business levels, future earnings, planned activities, anticipated growth, market opportunities, strategies, competitions, commitments, confidence in future results, efforts to create, enhance or otherwise unlock value, 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:

Previous wording

•the possibility that the Company may not realize the intended benefits of, or achieve the intended goals or outlooks with respect to, its strategic initiatives (including divestitures, acquisitions, or other potential transactions) or move up the value chain by focusing on more complex and innovative products to build a more durable higher margin portfolio;

Current wording

•the possibility that the Company may not realize the intended benefits of, or achieve the intended goals or outlooks with respect to, its strategic initiatives and priorities (including divestitures, acquisitions, strategic alliances, collaborations, or other potential transactions) or accelerate its growth by building on the strength of its base business with an expanding portfolio of innovative, best-in-class, patent-protected assets;

Previous wording

•the possibility that the Company may be unable to achieve intended or expected benefits, goals, outlooks, synergies, growth opportunities and operating efficiencies in connection with divestitures, acquisitions, other transactions, or restructuring programs, within the expected timeframes or at all;

Current wording

•the possibility that the Company may be unable to achieve intended or expected benefits, goals, outlooks, synergies, growth opportunities and operating efficiencies in connection with divestitures, acquisitions, strategic alliances, collaborations, or other transactions, or restructuring programs, within the expected timeframes or at all;

Previous wording

•goodwill or impairment charges or other losses, including but not limited to related to the divestiture or sale of businesses or assets;

Current wording

•goodwill or impairment charges or other losses;

Previous wording

•the potential impact of public health outbreaks, epidemics and pandemics;

Current wording

•the potential impact of natural or man-made disasters, public health outbreaks, epidemics, pandemics or social disruption in regions where we or our partners or suppliers operate;

Previous wording

•changes in relevant laws, regulations and policies and/or the application or implementation thereof, including but not limited to tax, healthcare and pharmaceutical laws, regulations and policies globally (including the impact of recent and potential tax reform in the U.S. and pharmaceutical product pricing policies in China);

Current wording

•changes in relevant laws, regulations and policies and/or the application or implementation thereof, including but not limited to tax, healthcare and pharmaceutical laws, regulations and policies globally;

Previous wording

•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 an acquisition or divestiture;

Current wording

•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 an adverse regulatory action, acquisition or divestiture;

Previous wording

•uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions, inflation rates and global exchange rates; and

Current wording

•uncertainties and matters beyond the control of management, including but not limited to general political and economic conditions, potential for adverse impacts from future tariffs and trade restrictions, inflation rates and global exchange rates; and

Previous wording

Viatris is a global healthcare company which we believe is uniquely positioned to bridge the traditional divide between generics and brands, combining the best of both to more holistically address healthcare needs globally. With a mission to empower people worldwide to live healthier at every stage of life, Viatris provides access at scale, currently supplying high-quality medicines to approximately 1 billion patients around the world annually and touching all of life’s moments, from birth to the end of life, acute conditions to chronic diseases. With our exceptionally extensive and diverse portfolio of medicines, a one-of-a-kind global supply chain designed to reach more people when and where they need them, and the scientific expertise to address some of the world's most enduring health challenges, access takes on deep meaning at Viatris.

Current wording

Viatris is a global healthcare company whose breadth and scale we believe make it uniquely positioned to address healthcare needs globally. With a mission to empower people worldwide to live healthier at every stage of life, Viatris supplies high-quality medicines to approximately 1 billion patients around the world each year. The Company has a global footprint, an extensive portfolio of medicines that is well-diversified across therapeutic areas, a one-of-a-kind global supply chain designed to reach more people when and where they need them, and the scientific expertise to address some of the world's most enduring health challenges.

Previous wording

Viatris’ executive management team is focused on ensuring that the Company is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers and other key stakeholders. The Company has industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise complemented by a strong commitment to quality and an unparalleled geographic footprint to deliver high-quality medicines to patients in more than 165 countries and territories. Viatris’ portfolio is comprised of approved molecules across a wide range of key therapeutic areas, including globally recognized iconic and key brands and generics, including complex products. The Company operates approximately 26 manufacturing and packaging sites worldwide that produce oral solid doses, injectables, complex dosage forms and API, with a global workforce of approximately 32,000. Viatris is headquartered in the U.S., with global centers in Pittsburgh, Pennsylvania, Shanghai, China and Hyderabad, India.

Current wording

Viatris’ executive management team is focused on ensuring that the Company is optimally structured and efficiently resourced to deliver sustainable value to patients, shareholders, customers and other key stakeholders. The Company operates in more than 165 countries and territories with approximately 32,000 employees. The Company has 26 manufacturing and packaging sites worldwide, more than 1,400 approved molecules, and industry leading commercial, R&D, regulatory, manufacturing, legal and medical expertise. Viatris’ portfolio consists of generics (including complex products), globally recognized iconic brands, and an expanding portfolio of innovative medicines. Viatris is headquartered in the U.S., with global centers in Pittsburgh, Pennsylvania, Shanghai, China and Hyderabad, India.

Previous wording

Viatris has four reportable segments: Developed Markets, Greater China, JANZ, and Emerging Markets. The Company reports segment information on the basis of markets and geography, which reflects its focus on bringing its broad and diversified portfolio of branded and generic products, including complex products, to people in markets everywhere. Our Developed Markets segment comprises our operations primarily in North America and Europe. Our Greater China segment includes our operations in China, Taiwan and Hong Kong. Our JANZ segment reflects our operations in Japan, Australia and New Zealand. Our Emerging Markets segment encompasses our presence in more than 125 countries with developing markets and emerging economies including in Asia, Africa, Eastern Europe, Latin America and the Middle East as well as the Company’s ARV franchise.

Current wording

Viatris has four reportable segments: Developed Markets, Greater China, JANZ, and Emerging Markets. The Company reports segment information on the basis of markets and geography, which reflects its focus on bringing its large and diversified portfolio of branded and generic products, including complex products, to people in markets everywhere. Our Developed Markets segment comprises our operations primarily in North America and Europe. Our Greater China segment includes our operations in mainland China, Taiwan and Hong Kong. Our JANZ segment consists of our operations in Japan, Australia and New Zealand. Our Emerging Markets segment encompasses our presence in more than 125 countries with developing markets and emerging economies including in Asia, Africa, Eastern Europe, Latin America and the Middle East as well as the Company’s ARV franchise.

Previous wording

Generic products, particularly in the U.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. 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 in Europe as compared to the U.S., primarily due to the role of government oversight of healthcare systems in the region.

Current wording

Generic products, particularly in the U.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. 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 in Europe as compared to the U.S., primarily due to the role of government oversight of healthcare systems in the region. In addition, U.S. governmental agencies provide funding for certain products in our Emerging Markets region. We expect that any reduction in that funding will have a negative impact on our financial condition, results of operations or cash flows.

Previous wording

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 the U.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, depending on certain factors – including decisions by Japanese regulatory and/or patent authorities – generic entry may occur for Amitiza® 24 μg in Japan in June or December 2025.

Current wording

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 the U.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, we expect generic entry for Amitiza® 24 μg to occur in Japan in December 2025 upon expiration of patent exclusivity.

Previous wording

In addition to the impact of competition, government pricing actions and other measures designed to reduce healthcare costs, our results of operations, cash flows and financial condition could also be affected by other risks of doing business internationally, including the impact of inflation, elections, geopolitical events, including the ongoing conflicts in the Middle East and between Russia and Ukraine and related trade controls, sanctions, supply chain and staffing challenges and other economic considerations, supply chain disruptions, foreign currency exchange fluctuations, public health epidemics, changes in intellectual property legal protections and other regulatory changes.

Current wording

In addition to the impact of competition, government pricing actions and other measures designed to reduce healthcare costs, our results of operations, cash flows and financial condition could also be affected by other risks of doing business internationally, including the impact of inflation, elections, geopolitical events, including the ongoing conflicts in the Middle East and between Russia and Ukraine and related trade controls, sanctions, supply chain disruptions and staffing challenges and other economic considerations, longer review, response and approval times as a result of evolving regulatory priorities and reductions in personnel at health agencies, the potential for adverse impacts from future tariffs and trade restrictions, foreign currency exchange fluctuations, public health epidemics, changes in intellectual property legal protections and other regulatory changes.

Previous wording

The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. The Company performed the annual goodwill impairment test as of April 1, 2024.

Current wording

The Company reviews goodwill for impairment annually on April 1st or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Since the end of February 2025, the Company has experienced a sharp and sustained decline in its share price and significantly increased uncertainty and volatility in the geopolitical and economic environments in which the Company operates. As a result of these factors, the Company determined that a triggering event had occurred for each of its reporting units and performed an interim goodwill impairment test as of March 31, 2025. When compared to the prior year annual goodwill impairment test completed on April 1, 2024, the recent significantly increased uncertainty and volatility in the geopolitical and economic environments in which the Company operates has increased the Company’s business risks, including, but not limited to, the potential for continued or additional drug pricing reduction pressures, general uncertainty related to timing of responses and approvals from the FDA resulting from evolving regulatory priorities and associated changes to the operations of the agency, and the potential for adverse impacts from future tariffs and trade restrictions. The negative impact of any or all of these factors could be material. The recent significant increase in business risks and uncertainty have led to an increase in discount rate assumptions impacting all reporting units as compared to the April 1, 2024 annual goodwill impairment test. For the three months ended March 31, 2025, the Company recorded a non-cash goodwill impairment charge of $2.9 billion as a result of the interim goodwill impairment test performed as of March 31, 2025.

Previous wording

On March 15, 2024, the Company acquired the development programs and certain personnel related to selatogrel and cenerimod from Idorsia in exchange for an upfront payment to Idorsia of $350 million, potential contingent milestone payments (including $300 million payable upon the achievement of certain development and regulatory milestones, and $2.1 billion payable upon the achievement of certain tiered sales milestones), as well as potential contingent tiered sales royalties. Viatris has worldwide commercialization rights for both selatogrel and cenerimod (excluding, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region). A joint development committee is overseeing the development of the ongoing Phase 3 programs through regulatory approval. The agreements also provide Viatris a right of first refusal and a right of first negotiation for certain other assets in Idorsia’s pipeline. The transaction expands our portfolio of innovative assets by adding two Phase 3 assets and combines our financial strength and worldwide operational infrastructure with Idorsia’s proven, highly-productive drug development team and innovation engine. Viatris and Idorsia are both contributing to the development costs for both programs, which are expected to be incurred through 2026. There are risks and uncertainties associated with the timely and successful completion of these programs, including but not limited to the high cost and uncertainty of conducting clinical trials (particularly with respect to new and/or complex or innovative drugs), obtaining approval by relevant regulatory bodies and our partner’s financial condition. Refer to Note 4 Acquisitions and Other Transactions in Part I, Item 1 of this Form 10-Q for more information.

Current wording

On March 15, 2024, the Company acquired exclusive global development and commercialization rights to two Phase 3 assets from Idorsia, as well as the potential to add additional innovative assets in the future. Under the terms of the original agreements, the development programs and certain personnel for selatogrel and cenerimod were transferred to Viatris from Idorsia in exchange for an upfront payment to Idorsia of $350 million, potential contingent milestone payments (including $300 million payable upon the achievement of certain development and regulatory milestones, and $2.1 billion payable upon the achievement of certain tiered sales milestones), as well as potential contingent tiered sales royalties. Viatris has worldwide commercialization rights for both selatogrel and cenerimod (which excluded, for cenerimod only, Japan, South Korea and certain countries in the Asia-Pacific region). A joint development committee was formed to oversee the development of the ongoing Phase 3 programs through regulatory approval. The agreements also provided Viatris a right of first refusal and a right of first negotiation for certain other assets in Idorsia’s pipeline. Viatris and Idorsia are both contractually obligated to contribute to the development costs for both programs, which are expected to be incurred through 2026.

Previous wording

On February 28, 2022, the Company announced that its Board of Directors had authorized a share repurchase program for the repurchase of up to $1.0 billion of the Company’s shares of common stock. The Company subsequently announced that on February 26, 2024, its Board of Directors authorized a $1.0 billion increase to the Company’s previously announced $1.0 billion share repurchase program. As a result, the Company’s share repurchase program now authorizes the repurchase of up to $2.0 billion of the Company’s shares of common stock. Such repurchases may be made from time-to-time at the Company’s discretion and effected by any means, including but not limited to, open market repurchases, pursuant to plans in accordance with Rules 10b5-1 or 10b-18 under the Exchange Act, privately negotiated transactions (including accelerated stock repurchase programs) or any combination of such methods as the Company deems appropriate. The program does not have an expiration date. During the nine months ended September 30, 2024 and 2023, the Company repurchased approximately 19.2 million shares of common stock at a cost of approximately $250 million, and approximately 21.2 million shares of common stock at a cost of approximately $250 million, respectively, under the program. As of September 30, 2024, the Company had repurchased a total of $500 million in shares under the program. The share repurchase program does not obligate the Company to acquire any particular amount of common stock.

Current wording

On February 28, 2022, the Company announced that its Board of Directors had authorized a share repurchase program for the repurchase of up to $1.0 billion of the Company’s shares of common stock. The Company subsequently announced that on February 26, 2024, its Board of Directors authorized a $1.0 billion increase to the Company’s previously announced $1.0 billion share repurchase program. As a result, the Company’s share repurchase program now authorizes the repurchase of up to $2.0 billion of the Company’s shares of common stock. Such repurchases may be made from time-to-time at the Company’s discretion and effected by any means, including but not limited to, open market repurchases, pursuant to plans in accordance with Rules 10b5-1 or 10b-18 under the Exchange Act, privately negotiated transactions (including accelerated stock repurchase programs) or any combination of such methods as the Company deems appropriate. The program does not have an expiration date. During the three months ended March 31, 2025 and 2024, the Company repurchased approximately 18.6 million shares of common stock at a cost of approximately $175.4 million, and approximately 19.2 million shares of common stock at a cost of approximately $250 million, respectively, under the program. As of March 31, 2025, the Company had repurchased a total of approximately 59.1 million shares of common stock at a cost of approximately $675.4 million under the program. Additionally, subsequent to March 31, 2025, the Company repurchased approximately 16.4 million shares of common stock at a cost of approximately $139.5 million, bringing the total to approximately 75.5 million shares of common stock at a cost of approximately $814.9 million under the program, in each case through and including May 7, 2025. The share repurchase program does not obligate the Company to acquire any particular amount of common stock.

Previous wording

The table below is a summary of the Company’s financial results for the three and nine months ended September 30, 2024 compared to the prior year period:

Current wording

The table below is a summary of the Company’s financial results for the three months ended March 31, 2025 compared to the prior year period:

Previous wording

(3)Reductions were driven primarily by the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024.

Current wording

(3)Reductions were driven primarily by the inclusion of net sales in the prior year period related to divestitures that closed during 2024 and the Indore Impact.

Previous wording

(4)For the three months ended September 30, 2024, other revenues in Developed Markets, Greater China, JANZ, and Emerging Markets were approximately $9.5 million, $0.4 million, $1.2 million, and $2.1 million, respectively.

Current wording

(4)For the three months ended March 31, 2025, other revenues in Developed Markets, JANZ, and Emerging Markets were approximately $6.9 million, $1.0 million, and $3.2 million, respectively.

Previous wording

For the nine months ended September 30, 2024, Viatris reported total revenues of $11.21 billion, compared to $11.59 billion for the comparable prior year period, representing a decrease of $378.4 million, or 3%. Total revenues include both net sales and other revenues from third parties. Net sales for the nine months ended September 30, 2024 were $11.18 billion, compared to $11.56 billion for the comparable prior year period, representing a decrease of $385.1 million, or 3%. Other revenues for the nine months ended September 30, 2024 were $33.8 million, compared to $27.1 million for the comparable prior year period.

Current wording

For the three months ended March 31, 2025, Viatris reported total revenues of $3.25 billion, compared to $3.66 billion for the comparable prior year period, representing a decrease of $409.1 million, or 11%. Total revenues include both net sales and other revenues from third parties. Net sales for the three months ended March 31, 2025 were $3.24 billion, compared to $3.65 billion for the comparable prior year period, representing a decrease of $410.3 million, or 11%. Other revenues for the three months ended March 31, 2025 were $11.1 million, compared to $9.9 million for the comparable prior year period.

Previous wording

Net sales decreased by approximately $445.4 million or 4% due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $190.9 million, or 2%, primarily reflecting changes in the U.S. Dollar as compared to the currencies of subsidiaries in Japan, China, and countries in Emerging Markets. Additionally, on a constant currency basis, net sales from the remaining business increased by approximately $251.2 million, or 2%, for the nine months ended September 30, 2024 compared to the prior year period. The increase was driven by new product sales of approximately $497.2 million, primarily in Developed Markets. New product sales include new products launched in 2024 and the carryover impact of new products, including business development, launched within the last twelve months. This increase was partially offset by base business erosion of approximately $246.0 million.

Current wording

Net sales decreased by approximately $237.4 million or 6% due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $85.1 million, or 2%, primarily reflecting changes in the U.S. Dollar as compared to the currencies of subsidiaries in the EU, Japan, China, and countries in Emerging Markets. On a constant currency basis, net sales from the remaining business decreased by approximately $87.8 million, or 2%, for the three months ended March 31, 2025 compared to the prior year period. The decrease was the result of base business erosion of approximately $154.6 million, approximately $140 million of which relates to the Indore Impact. This decrease was partially offset by new product sales of approximately $66.8 million, primarily in Developed Markets. New product sales include new products launched in 2025 and the carryover impact of new products, including business development, launched within the last twelve months.

Previous wording

From time to time, a limited number of our products may represent a significant portion of our net sales, gross profit and net earnings. Generally, this is due to the timing of new product introductions, seasonality, and the amount, if any, of additional competition in the market. Our top ten products in terms of net sales, in the aggregate, represented approximately 36% and 35% for the three months ended September 30, 2024 and 2023, respectively.

Current wording

From time to time, a limited number of our products may represent a significant portion of our net sales, gross profit and net earnings. Generally, this is due to the timing of new product introductions, seasonality, and the amount, if any, of additional competition in the market. Our top ten products in terms of net sales, in the aggregate, represented approximately 38% and 34% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Net sales from Developed Markets decreased by $109.8 million or 5% during the three months ended September 30, 2024 when compared to the prior year period. Net sales decreased by approximately $184.7 million or 8% due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. The favorable impact of foreign currency translation was approximately $15.4 million, or less than 1%. Constant currency net sales from the remaining business increased by approximately $59.5 million or 2% when compared to the prior year period. New product sales throughout Developed Markets, combined with the stability of our existing product portfolio, helped to offset the anticipated lower net sales of certain existing products within the U.S., including EpiPen® Auto-Injector, as a result of lower pricing due to additional competition and increased utilization within government channels. Net sales within North America totaled approximately $990.6 million and net sales within Europe totaled approximately $1.31 billion.

Current wording

Net sales from Developed Markets decreased by $273.7 million or 13% for the three months ended March 31, 2025 when compared to the prior year period. Net sales decreased by approximately $179.7 million or 8% due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The unfavorable impact of foreign currency translation was approximately $33.2 million or 2%. Constant currency net sales from the remaining business decreased by approximately $60.8 million or 3% when compared to the prior year period, driven primarily by lower net sales of certain existing products, including lenalidomide and everolimus in the U.S., as a result of the Indore Impact of approximately $80 million, partially offset by new product sales. Net sales within North America totaled approximately $800.9 million and net sales within Europe totaled approximately $1.09 billion.

Previous wording

Net sales from Greater China increased by $13.4 million or 2% for the three months ended September 30, 2024 when compared to the prior year period. The unfavorable impact of foreign currency translation was approximately $1.9 million. Constant currency net sales increased by approximately $15.3 million or 3% when compared to the prior year period, driven by higher volumes of existing products. Divestitures did not have a significant impact on the net sales for the current quarter.

Current wording

Net sales from Greater China increased by $11.6 million or 2% for the three months ended March 31, 2025 when compared to the prior year period. The unfavorable impact of foreign currency translation was approximately $12.0 million, or 2%. Constant currency net sales increased by approximately $24.1 million or 4% when compared to the prior year period, driven by strong growth across multiple channels, including e-commerce, retail, and private hospitals. Divestitures did not have a significant impact on the net sales for the current year period.

Previous wording

Net sales from JANZ decreased by $40.5 million or 4% for the nine months ended September 30, 2024 when compared to the prior year period. This decrease was the result of the unfavorable impact of foreign currency translation of approximately $70.6 million, or 7%. In addition, net sales decreased by approximately $7.1 million, or 1%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. Constant currency net sales from the remaining business increased by approximately $37.2 million, or 4%, when compared to the prior year period, driven primarily by new product sales in Australia and volume growth of our promoted brands in Japan. This increase was partially offset by lower net sales of existing products mainly driven by lower pricing in Japan as a result of government price reductions and additional competition.

Current wording

Net sales from JANZ decreased by $41.7 million or 13% for the three months ended March 31, 2025 when compared to the prior year period. This decrease was partially driven by the unfavorable impact of foreign currency translation of approximately $12.3 million, or 4%. In addition, net sales decreased by approximately $9.7 million, or 3%, due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. Constant currency net sales from the remaining business decreased by approximately $19.7 million, or 6%, when compared to the prior year period, driven primarily by lower net sales of existing products in Japan as a result of government price reductions and additional competition, and by the Indore Impact of approximately $3.0 million.

Previous wording

Net sales from Emerging Markets decreased by $109.3 million or 17% for the three months ended September 30, 2024 when compared to the prior year period. Net sales decreased by approximately $99.5 million, or 15%, due to the inclusion of net sales in the prior year period related to divestitures that have closed during 2023 and 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $18.3 million, or 3%. Constant currency net sales from the remaining business increased by $8.5 million, or 1% when compared to the prior year period, primarily driven by new products and higher volumes of existing products in certain Latin American, Middle Eastern and Asian countries.

Current wording

Net sales from Emerging Markets decreased by $106.5 million or 17% for the three months ended March 31, 2025 when compared to the prior year period. Net sales decreased by approximately $47.5 million, or 8%, due to the inclusion of net sales in the prior year period related to divestitures that closed during 2024. The decrease in net sales was also partially driven by the unfavorable impact of foreign currency translation of approximately $27.6 million, or 4%. Constant currency net sales from the remaining business decreased by $31.4 million, or 5% when compared to the prior year period, primarily driven by lower volumes in our ARV business, mainly as a result of the Indore Impact of approximately $57.0 million. These decreases were partially offset by new product sales in certain Latin American countries.

Previous wording

Cost of sales increased from $2.25 billion for the three months ended September 30, 2023 to $2.29 billion for the three months ended September 30, 2024. The increase in cost of sales was primarily driven by restructuring related costs for additional anticipated plant closures. This increase was partially offset by the impact of the decrease in net sales, including as a result of the divestitures that have closed during 2023 and 2024.

Current wording

Cost of sales decreased from $2.16 billion for the three months ended March 31, 2024 to $2.09 billion for the three months ended March 31, 2025. The decrease in cost of sales was largely driven by the impact of the decrease in net sales, including as a result of the divestitures that closed during 2024 and the Indore Impact.

Previous wording

Gross profit for the three months ended September 30, 2024 was $1.46 billion and gross margins were 39%. For the three months ended September 30, 2023, gross profit was $1.69 billion and gross margins were 43%. The changes in gross profit and gross margins are primarily related to the impact of the divestitures and the restructuring-related costs discussed above. Adjusted gross margins were approximately 58% for the three months ended September 30, 2024, compared to approximately 59% for the three months ended September 30, 2023.

Current wording

Gross profit for the three months ended March 31, 2025 was $1.16 billion and gross margins were 36%. For the three months ended March 31, 2024, gross profit was $1.50 billion and gross margins were 41%. The changes in gross profit and gross margins are primarily related to the impact of the divestitures and the Indore Impact. Adjusted gross margins were approximately 56% for the three months ended March 31, 2025, compared to approximately 59% for the three months ended March 31, 2024.

Previous wording

SG&A expense for the current quarter was $1.00 billion, compared to $1.05 billion for the comparable prior year period, a decrease of $50.1 million. The decrease was primarily driven by the impact of the divestitures, including lower acquisition and divestiture-related costs of approximately $21.5 million.

Current wording

SG&A expense for the three months ended March 31, 2025 was $948.1 million, compared to $1.02 billion for the comparable prior year period, a decrease of $69.4 million. The decrease was primarily due to the impact of the divestitures, and lower acquisition and divestiture-related costs of approximately $48.7 million. These decreases were partially offset by higher restructuring-related costs of approximately $56.7 million.

Previous wording

The following table includes the losses/(gains) recognized in litigation settlements and other contingencies, net during the three months ended September 30, 2024 and 2023, respectively:

Current wording

The following table includes the (gains)/losses recognized in litigation settlements and other contingencies, net during the three months ended March 31, 2025 and 2024, respectively:

Previous wording

Contingent consideration adjustment for the current quarter was primarily driven by a fair value adjustment related to the Idorsia contingent consideration liability. Refer to Note 11 Financial Instruments and Risk Management in Part I, Item 1 of this Form 10-Q for more information.

Current wording

Refer to Note 4 Acquisitions and Other Transactions and Note 11 Financial Instruments and Risk Management included in Part I, Item 1 of this Form 10-Q for more information with respect to the contingent consideration adjustment.

Previous wording

Also refer to Note 17 Litigation in Part I, Item 1 of this Form 10-Q for more information.

Current wording

Also refer to Note 17 Litigation included in Part I, Item 1 of this Form 10-Q for more information on litigation settlements, net.

Previous wording

Other income, net includes gains and losses from divestitures of businesses, changes in the fair value of equity securities, extinguishment of debt, foreign exchange, expense (income) related to post-employment benefit plans, TSA income, and interest and dividend income. Other income, net for the three months ended September 30, 2024 totaled $10.2 million, compared to $92.0 million for the three months ended September 30, 2023.

Current wording

Other expense (income), net includes gains and losses from divestitures of businesses, changes in the fair value of equity securities, extinguishment of debt, foreign exchange, expense (income) related to post-employment benefit plans, TSA income, and interest and dividend income. Other expense (income), net for the three months ended March 31, 2025 totaled $99.3 million of expense, compared to $139.1 million of income for the three months ended March 31, 2024, a decrease of $238.4 million.

Previous wording

For the three months ended September 30, 2024, the Company recognized an income tax benefit of $4.3 million, compared to an income tax provision of $70.6 million for the comparable prior year period, a change of $74.9 million. The current year and prior year provisions were impacted by the levels of income and the changing mix at which it is earned in jurisdictions with differing tax rates.

Current wording

For the three months ended March 31, 2025, the Company recognized an income tax benefit of $55.0 million, compared to an income tax provision of $90.7 million for the comparable prior year period, a change of $145.7 million. The benefit in the current year period is primarily driven by the loss before income taxes, partially offset by the negative impact of the goodwill impairment charge, for which minimal tax benefit was realized, and a $17.7 million accrual related to the resolution of the previously disclosed Swedish tax matter. The current year and prior year provisions were also impacted by the levels of income and the changing mix at which it is earned in jurisdictions with differing tax rates.

Previous wording

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 as U.S. GAAP net earnings (loss) adjusted for 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, gain on divestitures of businesses, restructuring related costs, impairment of long-lived assets, acquisition and divestiture-related 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.

Current wording

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 as U.S. GAAP net earnings (loss) adjusted for 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, gain (loss) on divestitures of businesses, impairment of long-lived assets and goodwill, restructuring, acquisition and divestiture-related 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.

Previous wording

Reconciliation of U.S. GAAP Net Earnings (Loss) to Adjusted Net Earnings and U.S. GAAP Earnings (Loss) Per Share to Adjusted EPS

Current wording

Reconciliation of U.S. GAAP Net (Loss) Earnings to Adjusted Net Earnings and U.S. GAAP EPS to Adjusted EPS

Previous wording

A reconciliation between net earnings (loss) and diluted earnings (loss) per share as reported under U.S. GAAP, and adjusted net earnings and adjusted EPS for the periods shown follows:

Current wording

A reconciliation between net (loss) earnings and diluted EPS as reported under U.S. GAAP, and adjusted net earnings and adjusted EPS for the periods shown follows:

Previous wording

(d)Acquisition and divestiture-related costs consist primarily of transaction costs including legal and consulting fees and integration activities.

Current wording

(c)Acquisition and divestiture-related costs consist primarily of transaction costs including legal and consulting fees and integration activities.