Cover and table of contents

222K characters. Original on sec.gov · Markdown

Cover and table of contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __to

Commission file number 001-39695

VIATRIS INC.

(Exact name of registrant as specified in its charter)


Delaware						83-4364296
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1000 Mylan Boulevard, Canonsburg, Pennsylvania 15317

(Address of principal executive offices)

(724) 514-1800

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class:	Trading Symbol(s)	Name of Each Exchange on Which Registered:

Common Stock, par value $0.01 per share	VTRS	The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of shares of common stock outstanding, par value $0.01 per share, of the registrant as of August 2, 2023 was 1,199,532,495.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

For the Quarterly Period Ended

June 30, 2023


		Page
	PART I — FINANCIAL INFORMATION
ITEM 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations — Three and Six Months Ended June 30 , 2023 and 2022	7
	Condensed Consolidated Statements of Comprehensive Earnings (Loss) — Three and Six Months Ended June 30 , 2023 and 2022	8
	Condensed Consolidated Balance Sheets — June 30 , 2023 and December 31, 2022	9
	Condensed Consolidated Statements of Equity — Three and Six Months Ended June 30 , 2023 and 2022	10
	Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30 , 2023 and 2022	12

	Notes to Condensed Consolidated Financial Statements	13

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	73

ITEM 4.	Controls and Procedures	73

	PART II — OTHER INFORMATION
ITEM 1.	Legal Proceedings	74

ITEM 1A.	Risk Factors	74

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74

ITEM 5.	Other Information	74

ITEM 6.	Exhibits	75

SIGNATURES		76

Table of Contents

Glossary of Defined Terms

Unless the context requires otherwise, references to “Viatris,” “the Company,” “we,” “us” or “our” in this Form 10-Q (defined below) refer to Viatris Inc. and its subsidiaries. We also have used several other terms in this Form 10-Q, most of which are explained or defined below. Some amounts in this Form 10-Q may not add due to rounding.


2003 LTIP			Mylan N.V. Amended and Restated 2003 Long-Term Incentive Plan
2020 Incentive Plan			Viatris Inc. 2020 Stock Incentive Plan
2022 Form 10-K			Viatris’ annual report on Form 10-K for the fiscal year ended December 31, 2022, as amended
Adjusted EBITDA			Non-GAAP financial measure that the Company believes is appropriate to provide information to investors - EBITDA (defined below) is further adjusted for share-based compensation expense, litigation settlements, and other contingencies, net, restructuring and other special items
ANDA			Abbreviated New Drug Application
AOCE			Accumulated other comprehensive earnings
API			Active pharmaceutical ingredient
ARV			Antiretroviral medicines
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
Biocon			Biocon Limited
Biocon Biologics			Biocon Biologics Limited, a majority owned subsidiary of Biocon
Biocon Biologics Transaction			The transaction between Viatris and Biocon Biologics pursuant to which Viatris contributed its biosimilars portfolio, composed of the Biocon collaboration programs, biosimilars to Humira®, Enbrel®, and Eylea®, as well as related assets and liabilities to Biocon Biologics
Biocon Agreement			The transaction agreement between Viatris and Biocon Biologics, dated February 27, 2022, relating to the Biocon Biologics Transaction, as amended from time to time by that certain Amendment No. 1 to Transaction Agreement, dated November 28, 2022 and that certain Omnibus Amendment No. 1, dated May 17, 2023
Biogen			Biogen MA Inc. and Biogen International GmbH, collectively
Business Combination Agreement			Business Combination Agreement, dated as of July 29, 2019, as amended from time to time, among Viatris, Mylan, Pfizer and certain of their affiliates
CCPS			Compulsory convertible preferred shares

Code			The U.S. Internal Revenue Code of 1986, as amended
Combination			Refers to Mylan combining with Pfizer's Upjohn Business in a Reverse Morris Trust transaction to form Viatris on November 16, 2020
Commercial Paper Program			The $1.65 billion unsecured commercial paper program entered into as of November 16, 2020 by Viatris, as issuer, Mylan Inc., Utah Acquisition Sub Inc. and Mylan II B.V., as guarantors, and certain dealers from time to time
COVID-19			Novel coronavirus disease of 2019
CP Notes			Unsecured, short-term commercial paper notes issued pursuant to the Commercial Paper Program
Developed Markets segment			Viatris’ business segment that includes our operations primarily in the following markets: North America and Europe
Distribution			Pfizer's distribution to Pfizer stockholders all the issued and outstanding shares of Upjohn Inc.

Table of Contents


DOJ			U.S. Department of Justice
EBITDA			Non-GAAP financial measure that the Company believes is appropriate to provide information to investors - U.S. GAAP net earnings (loss) adjusted for net contribution attributable to equity method investments, income tax provision (benefit), interest expense and depreciation and amortization
EDPA			U.S. District Court for the Eastern District of Pennsylvania
Emerging Markets segment			Viatris’ business segment that includes, but is not limited to, our operations primarily in the following markets: Parts of Asia, the Middle East, South and Central America, Africa, and Eastern Europe

EU			European Union
Exchange Act			Securities Exchange Act of 1934, as amended
Famy Life Sciences			Famy Life Sciences Private Limited
FASB			Financial Accounting Standards Board
FDA			U.S. Food and Drug Administration
Form 10-Q			This quarterly report on Form 10-Q for the quarterly period ended June 30, 2023
GA Depot			Long-acting glatiramer acetate depot product
Global Systemically Important Banks			Financial institutions that are considered systemically important by the Financial Stability Board.
Greater China segment			Viatris’ business segment that includes our operations primarily in the following markets: China, Taiwan and Hong Kong
Gx			Generic drugs
IPR&D			In-process research and development
IRS			U.S. Internal Revenue Service
IT			Information technology
JANZ segment			Viatris’ business segment that includes our operations in the following markets: Japan, Australia and New Zealand
LIBOR			London Interbank Offered Rate
Lilly			Eli Lilly and Company
Mapi			Mapi Pharma Ltd.
Maximum Leverage Ratio			The maximum consolidated leverage ratio financial covenant requiring maintenance of a maximum ratio of consolidated total indebtedness as of the end of any quarter to consolidated EBITDA for the trailing four quarters as defined in the related credit agreements from time to time
MDL			Multidistrict litigation

Mylan			Mylan N.V. and its subsidiaries
Mylan Inc. U.S. Dollar Notes			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 issued by Mylan Inc., which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan II B.V., Viatris Inc. and Utah Acquisition Sub Inc.

NASDAQ			The NASDAQ Stock Market
NDA			New drug application
NHS			National Health Services
Note Securitization Facility			The note securitization facility entered into in August 2022 for borrowings up to $200 million and expiring in August 2023
OTC			Over-the-counter
Oyster Point			Oyster Point Pharma, Inc.
Pfizer			Pfizer Inc.

Table of Contents


PSUs			Performance awards
R&D			Research and development
Receivables Facility			The $400 million accounts receivable entered into in August 2020 and expiring in April 2025
Registered Upjohn Notes			The 1.650% Senior Notes due 2025, 2.300% Senior Notes due 2027, 2.700% Senior Notes due 2030, 3.850% Senior Notes due 2040 and 4.000% Senior Notes due 2050 originally issued on October 29, 2021 registered with the SEC in exchange for the corresponding Unregistered Upjohn U.S. Dollar Notes in a similar aggregate principal amount and with terms substantially identical to the corresponding Unregistered Upjohn U.S. Dollar Notes and fully and unconditionally guaranteed by Mylan Inc., Mylan II B.V. and Utah Acquisition Sub Inc.
Respiratory Delivery Platform			Pfizer’s proprietary dry powder inhaler delivery platform
Restricted Stock Awards			The Company’s nonvested restricted stock and restricted stock unit awards, including PSUs
Revolving Facility			The $4.0 billion revolving facility dated as of July 1, 2021, by and among Viatris, certain lenders and issuing banks from time to time party thereto and Bank of America, N.A., as administrative agent
RICO			Racketeer Influenced and Corrupt Organizations Act
RSUs			The Company's unvested restricted stock unit awards
Sanofi			Sanofi-Aventis U.S., LLC
SARs			Stock Appreciation Rights
SDNY			U.S. District Court for the Southern District of New York
SEC			U.S. Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
Senior U.S. Dollar Notes			The Upjohn U.S. Dollar Notes, the Utah U.S. Dollar Notes and the Mylan Inc. U.S. Dollar Notes, collectively
Separation and Distribution Agreement			Separation and Distribution Agreement between Viatris and Pfizer, dated as of July 29, 2019, as amended from time to time
SG&A			Selling, general and administrative expenses
SOFR			Secured overnight financial rate
Stock awards			Stock options and SARs
Teva			Teva Pharmaceutical Industries Ltd.
TSA			Transition services agreement
U.K.			United Kingdom
U.S.			United States
U.S. GAAP			Accounting principles generally accepted in the U.S.
Unregistered Upjohn U.S. Dollar Notes			The 1.650% Senior Notes due 2025, 2.300% Senior Notes due 2027, 2.700% Senior Notes due 2030, 3.850% Senior Notes due 2040 and 4.000% Senior Notes due 2050 originally issued on June 22, 2020 by Upjohn Inc. (now Viatris Inc.) in a private offering exempt from the registration requirements of the Securities Act and fully and unconditionally guaranteed by Mylan Inc., Mylan II B.V. and Utah Acquisition Sub Inc.
Upjohn			Upjohn Inc., a wholly owned subsidiary of Pfizer prior to the Distribution, that combined with Mylan and was renamed Viatris Inc.

Table of Contents


Upjohn Business			Pfizer’s off-patent branded and generic established medicines business that, in connection with the Combination, was separated from Pfizer and combined with Mylan to form Viatris
Upjohn Distributor Markets			Select geographic markets that were part of the Combination that are smaller in nature and in which we had no established infrastructure prior to or following the Combination and that the Company intends to divest
Upjohn U.S. Dollar Notes			Senior unsecured notes denominated in U.S. dollars and originally issued by Upjohn Inc. or Viatris Inc. pursuant to an indenture dated June 22, 2020 and fully and unconditionally guaranteed by Mylan Inc., Mylan II B.V. and Utah Acquisition Sub Inc.
Utah Acquisition Sub			Utah Acquisition Sub Inc., a Delaware corporation and an indirect wholly owned subsidiary of Viatris
Utah U.S. Dollar Notes			The 3.950% Senior Notes due 2026 and 5.250% Senior Notes due 2046 issued by Utah Acquisition Sub Inc., which are fully and unconditionally guaranteed on a senior unsecured basis by Mylan Inc., Viatris Inc. and Mylan II B.V.
Viatris			Viatris Inc., formerly known as Upjohn Inc. prior to the completion of the Combination
YEN Term Loan Facility			The ¥40 billion term loan agreement dated as of July 1, 2021, among Viatris, the guarantors from time to time party thereto, the lenders from time to time party thereto and Mizuho Bank, Ltd., as administrative agent

Table of Contents

PART I — FINANCIAL INFORMATION

VIATRIS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited; in millions, except per share amounts)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues:
Net sales	$	3,909.5	$	4,105.4	$	7,628.6	$	8,283.6
Other revenues	9.1		11.4		19.1		24.9
Total revenues	3,918.6		4,116.8		7,647.7		8,308.5
Cost of sales	2,310.0		2,413.5		4,496.9		4,834.0
Gross profit	1,608.6		1,703.3		3,150.8		3,474.5
Operating expenses:
Research and development	208.3		162.6		391.2		304.9
Acquired IPR&D	10.2		—		10.2		—
Selling, general and administrative	1,031.9		981.1		1,990.8		1,896.4
Litigation settlements and other contingencies, net	(11.0)		10.9		(10.4)		17.1
Total operating expenses	1,239.4		1,154.6		2,381.8		2,218.4
Earnings from operations	369.2		548.7		769.0		1,256.1
Interest expense	143.7		145.9		290.7		292.1
Other (income) expense, net	(107.5)		13.5		(177.4)		47.2
Earnings before income taxes	333.0		389.3		655.7		916.8
Income tax provision	69.0		75.4		167.0		203.7
Net earnings	$	264.0	$	313.9	$	488.7	$	713.1
Earnings per share attributable to Viatris Inc. shareholders
Basic	$	0.22	$	0.26	$	0.41	$	0.59
Diluted	$	0.22	$	0.26	$	0.41	$	0.59
Weighted average shares outstanding:
Basic	1,199.0		1,212.3		1,200.8		1,211.4
Diluted	1,203.5		1,217.1		1,204.6		1,215.1

See Notes to Condensed Consolidated Financial Statements

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(Unaudited; in millions)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net earnings	$	264.0	$	313.9	$	488.7	$	713.1
Other comprehensive loss, before tax:
Foreign currency translation adjustment	(254.1)		(1,149.9)		(208.8)		(1,619.1)
Change in unrecognized (loss) gain and prior service cost related to defined benefit plans	(6.8)		0.5		(5.5)		(2.1)
Net unrecognized gain on derivatives in cash flow hedging relationships	36.8		17.6		39.6		17.8
Net unrecognized (loss) gain on derivatives in net investment hedging relationships	(12.8)		384.4		(79.0)		585.7
Net unrealized gain (loss) on marketable securities	0.2		(1.0)		1.1		(2.7)
Other comprehensive loss, before tax	(236.7)		(748.4)		(252.6)		(1,020.4)
Income tax provision (benefit)	4.3		89.8		(8.2)		134.5
Other comprehensive loss, net of tax	(241.0)		(838.2)		(244.4)		(1,154.9)
Comprehensive earnings (loss)	$	23.0	$	(524.3)	$	244.3	$	(441.8)

See Notes to Condensed Consolidated Financial Statements

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited in millions, except share and per share amounts)


	June 30, 2023		December 31, 2022
ASSETS
Assets
Current assets:
Cash and cash equivalents	$	629.2	$	1,259.9
Accounts receivable, net	3,607.3		3,814.5
Inventories	3,641.5		3,519.5
Prepaid expenses and other current assets	1,725.1		1,811.2
Assets held for sale	174.9		230.3
Total current assets	9,778.0		10,635.4
Property, plant and equipment, net	2,983.2		3,024.5
Intangible assets, net	22,084.4		22,607.1
Goodwill	10,532.5		10,425.8
Deferred income tax benefit	966.0		925.9
Other assets	2,351.1		2,403.5
Total assets	$	48,695.2	$	50,022.2

LIABILITIES AND EQUITY
Liabilities
Current liabilities:
Accounts payable	$	1,962.0	$	1,766.6
Short-term borrowings	23.2		—
Income taxes payable	158.1		279.6
Current portion of long-term debt and other long-term obligations	1,334.4		1,259.1

Other current liabilities	3,046.1		3,440.9
Total current liabilities	6,523.8		6,746.2
Long-term debt	17,246.0		18,015.2
Deferred income tax liability	2,407.8		2,432.0
Other long-term obligations	1,674.3		1,756.5
Total liabilities	27,851.9		28,949.9
Equity
Viatris Inc. shareholders’ equity
Common stock: $0.01 par value, 3,000,000,000 shares authorized; shares issued: 1,220,385,566 and 1,213,793,231, respectively	12.2		12.1
Additional paid-in capital	18,719.4		18,645.8
Retained earnings	5,369.1		5,175.6
Accumulated other comprehensive loss	(3,005.6)		(2,761.2)
	21,095.1		21,072.3

Less: Treasury stock — at cost
Common stock shares: 21,239,521 as of June 30, 2023	251.8		—
Total equity	20,843.3		21,072.3

Total liabilities and equity	$	48,695.2	$	50,022.2

See Notes to Condensed Consolidated Financial Statements

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(Unaudited; in millions, except share and per share amounts)


				Additional Paid-In Capital		Retained Earnings					Accumulated Other Comprehensive Loss		Total Equity
	Common Stock					Treasury Stock
	Shares	Cost				Shares		Cost
Balance at March 31, 2023	1,220,224,204	$	12.2	$	18,679.6	$	5,252.5	21,239,521	$	(251.8)	$	(2,764.6)	$	20,927.9
Net earnings	—	—		—		264.0		—	—		—		264.0
Other comprehensive loss, net of tax	—	—		—		—		—	—		(241.0)		(241.0)
Issuance of restricted stock and stock options exercised, net	71,988	—		0.1		—		—	—		—		0.1
Taxes related to the net share settlement of equity awards	—	—		(0.3)		—		—	—		—		(0.3)
Share-based compensation expense	—	—		39.2		—		—	—		—		39.2



Issuance of common stock	89,374	—		0.8		—		—	—		—		0.8
Cash dividends declared, $0.12 per common share	—	—		—		(147.4)		—	—		—		(147.4)

Balance at June 30, 2023	1,220,385,566	$	12.2	$	18,719.4	$	5,369.1	21,239,521	$	(251.8)	$	(3,005.6)	$	20,843.3

				Additional Paid-In Capital		Retained Earnings					Accumulated Other Comprehensive Loss		Total Equity
	Common Stock					Treasury Stock
	Shares	Cost				Shares		Cost
Balance at December 31, 2022	1,213,793,231	$	12.1	$	18,645.8	$	5,175.6	—	$	—	$	(2,761.2)	$	21,072.3
Net earnings	—	—		—		488.7		—	—		—		488.7
Other comprehensive loss, net of tax	—	—		—		—		—	—		(244.4)		(244.4)
Issuance of restricted stock and stock options exercised, net	6,422,573	0.1		3.7		—		—	—		—		3.8
Taxes related to the net share settlement of equity awards	—	—		(19.7)		—		—	—		—		(19.7)
Share-based compensation expense	—	—		81.8		—		—	—		—		81.8

Common stock repurchase	—	—		—		—		21,239,521	(251.8)		—		(251.8)

Issuance of common stock	169,762	—		1.7		—		—	—		—		1.7
Cash dividends declared, $0.24 per common share	—	—		—		(295.2)		—	—		—		(295.2)
Other	—	—		6.1		—		—	—		—		6.1
Balance at June 30, 2023	1,220,385,566	$	12.2	$	18,719.4	$	5,369.1	21,239,521	$	(251.8)	$	(3,005.6)	$	20,843.3

See Notes to Condensed Consolidated Financial Statements

Table of Contents


				Additional Paid-In Capital		Retained Earnings					Accumulated Other Comprehensive Loss		Total Equity
	Ordinary Shares (1)					Treasury Stock
	Shares	Cost				Shares		Cost
Balance at March 31, 2022	1,212,323,483	$	12.1	$	18,555.1	$	3,941.5	—	$	—	$	(2,061.0)	$	20,447.7
Net earnings	—	—		—		313.9		—	—		—		313.9
Other comprehensive loss, net of tax	—	—		—		—		—	—		(838.2)		(838.2)
Issuance of restricted stock, net	64,292	—		—		—		—	—		—		—
Taxes related to the net share settlement of equity awards	—	—		0.5		—		—	—		—		0.5
Share-based compensation expense	—	—		29.4		—		—	—		—		29.4


Issuance of common stock	59,682	—		0.7		—		—	—		—		0.7
Cash dividends declared, $0.12 per common share	—	—		—		(148.6)		—	—		—		(148.6)

Balance at June 30, 2022	1,212,447,457	$	12.1	$	18,585.7	$	4,106.8	—	$	—	$	(2,899.2)	$	19,805.4

				Additional Paid-In Capital		Retained Earnings					Accumulated Other Comprehensive Loss		Total Equity
	Common Stock					Treasury Stock
	Shares	Cost				Shares		Cost
Balance at December 31, 2021	1,209,507,463	$	12.1	$	18,536.1	$	3,688.8	—	$	—	$	(1,744.3)	$	20,492.7
Net earnings	—	—		—		713.1		—	—		—		713.1
Other comprehensive loss, net of tax	—	—		—		—		—	—		(1,154.9)		(1,154.9)
Issuance of restricted stock, net	2,880,312	—		—		—		—	—		—		—
Taxes related to the net share settlement of equity awards	—	—		(8.8)		—		—	—		—		(8.8)
Share-based compensation expense	—	—		57.7		—		—	—		—		57.7


Issuance of common stock	59,682	—		0.7		—		—	—		—		0.7
Cash dividends declared, $0.24 per common share	—	—		—		(295.1)		—	—		—		(295.1)

Balance at June 30, 2022	1,212,447,457	$	12.1	$	18,585.7	$	4,106.8	—	$	—	$	(2,899.2)	$	19,805.4

See Notes to Condensed Consolidated Financial Statements

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited; in millions)


	Six Months Ended
	June 30,
	2023		2022
Cash flows from operating activities:
Net earnings	$	488.7	$	713.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,416.7		1,458.3
Share-based compensation expense	81.8		57.7
Deferred income tax benefit	(94.9)		(157.6)

Other non-cash items	42.9		3.8
Litigation settlements and other contingencies, net	(6.3)		10.0
Changes in operating assets and liabilities:
Accounts receivable	69.2		(142.3)
Inventories	(266.5)		(270.1)
Accounts payable	192.7		254.5
Income taxes	(22.1)		17.8
Other operating assets and liabilities, net	(416.1)		(4.2)
Net cash provided by operating activities	1,486.1		1,941.0
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired	(667.7)		—
Capital expenditures	(115.6)		(148.4)
Purchase of marketable securities	(16.6)		(13.2)
Proceeds from the sale of marketable securities	16.6		12.8
Payments for product rights and other, net	(55.9)		(13.0)

Proceeds from sale of property, plant and equipment	13.1		12.8
Net cash used in investing activities	(826.1)		(149.0)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	—		795.4
Payments of long-term debt	(750.1)		(1,787.0)
Purchase of common stock	(250.0)		—
Change in short-term borrowings, net	23.1		(473.5)
Taxes paid related to net share settlement of equity awards	(30.0)		(13.2)
Contingent consideration payments	(8.4)		(18.9)
Payments of financing fees	—		(1.3)
Cash dividends paid	(287.7)		(290.6)
Non-contingent payments for product rights	(9.7)		—
Issuance of common stock	1.7		0.7
Other items, net	32.9		(0.2)
Net cash used in financing activities	(1,278.2)		(1,788.6)
Effect on cash of changes in exchange rates	(12.9)		(40.2)
Net decrease in cash, cash equivalents and restricted cash	(631.1)		(36.8)
Cash, cash equivalents and restricted cash — beginning of period	1,262.5		706.2
Cash, cash equivalents and restricted cash — end of period	$	631.4	$	669.4

See Notes to Condensed Consolidated Financial Statements

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

**1.**General

The accompanying unaudited condensed consolidated financial statements (“interim financial statements”) of Viatris Inc. and subsidiaries were prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for reporting on Form 10-Q; therefore, as permitted under these rules, certain footnotes and other financial information included in audited financial statements were condensed or omitted. The interim financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the interim results of operations, comprehensive earnings, financial position, equity and cash flows for the periods presented.

These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in Viatris’ 2022 Form 10-K. The December 31, 2022 condensed consolidated balance sheet was derived from audited financial statements.

The interim results of operations and comprehensive earnings for the three and six months ended June 30, 2023, and cash flows for the six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full fiscal year or any other future period.

**2.**Revenue Recognition and Accounts Receivable

The Company recognizes revenues in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes net revenue for product sales when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues are recorded net of provisions for variable consideration, including discounts, rebates, governmental rebate programs, price adjustments, returns, chargebacks, promotional programs and other sales allowances. Accruals for these provisions are presented in the condensed consolidated financial statements as reductions in determining net sales and as a contra asset in accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash).

Our net sales may be impacted by wholesaler and distributor inventory levels of our products, which can fluctuate throughout the year due to the seasonality of certain products, pricing, the timing of product demand, purchasing decisions and other factors. Such fluctuations may impact the comparability of our net sales between periods.

Consideration received from licenses of intellectual property is recorded as other revenues. Royalty or profit share amounts, which are based on sales of licensed products or technology, are recorded when the customer’s subsequent sales or usages occur. Such consideration is included in other revenues in the condensed consolidated statements of operations.

The following table presents the Company’s net sales by product category for each of our reportable segments for the three and six months ended June 30, 2023 and 2022, respectively:


(In millions)	Three Months Ended June 30, 2023
Product Category	Developed Markets		Greater China		JANZ		Emerging Markets		Total
Brands	$	1,300.2	$	530.5	$	207.4	$	406.6	$	2,444.7
Complex Gx	132.7		—		6.5		—		139.2
Generics	920.9		1.6		161.6		241.5		1,325.6
Total	$	2,353.8	$	532.1	$	375.5	$	648.1	$	3,909.5


(In millions)	Six Months Ended June 30, 2023
Product Category	Developed Markets		Greater China		JANZ		Emerging Markets		Total
Brands	$	2,532.2	$	1,092.9	$	397.7	$	842.2	$	4,865.0
Complex Gx	262.6		—		12.6		0.1		275.3
Generics	1,729.4		3.8		307.4		447.7		2,488.3
Total	$	4,524.2	$	1,096.7	$	717.7	$	1,290.0	$	7,628.6

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


(In millions)	Three Months Ended June 30, 2022
Product Category	Developed Markets		Greater China		JANZ		Emerging Markets		Total
Brands	$	1,305.4	$	546.3	$	243.1	$	388.3	$	2,483.1
Complex Gx and Biosimilars	327.0		0.3		12.1		15.4		354.8
Generics	846.7		1.7		171.9		247.2		1,267.5
Total	$	2,479.1	$	548.3	$	427.1	$	650.9	$	4,105.4


(In millions)	Six Months Ended June 30, 2022
Product Category	Developed Markets		Greater China		JANZ		Emerging Markets		Total
Brands	$	2,604.1	$	1,116.0	$	492.1	$	825.0	$	5,037.2
Complex Gx and Biosimilars	691.1		0.3		22.4		31.8		745.6
Generics	1,660.0		5.1		336.4		499.3		2,500.8
Total	$	4,955.2	$	1,121.4	$	850.9	$	1,356.1	$	8,283.6

(a)Amounts for the three and six months ended June 30, 2023 include the unfavorable impact of foreign currency translations compared to the prior year period.

(b)Amounts for the three and six months ended June 30, 2022 include $161.8 million and $326.6 million, respectively, related to the biosimilars business which was subsequently contributed to Biocon Biologics in November 2022. The Company has not recognized the results of the biosimilars business in its consolidated financial statements subsequent to November 29, 2022.

The following table presents net sales on a consolidated basis for select key products for the three and six months ended June 30, 2023 and 2022:


	Three months ended June 30,				Six months ended June 30,
(In millions)	2023		2022		2023		2022
Select Key Global Products
Lipitor ®	$	380.0	$	405.6	$	797.9	$	845.7
Norvasc ®	182.4		203.0		385.1		410.8
Lyrica ®	137.1		155.8		281.4		327.4
EpiPen® Auto-Injectors	127.5		106.5		223.3		195.3
Viagra ®	111.0		115.1		226.0		244.9
Celebrex ®	82.0		85.9		170.8		171.2
Creon ®	74.1		75.4		146.8		150.1
Effexor ®	64.8		73.7		129.4		151.2
Zoloft ®	54.5		62.5		111.0		135.6
Xalabrands	50.4		42.7		97.1		95.7

Select Key Segment Products

Dymista ®	$	57.7	$	55.5	$	110.9	$	99.4
Yupelri ®	55.0		49.1		102.0		92.7
Xanax ®	51.8		37.2		91.5		77.2
Amitiza ®	41.5		44.1		78.1		85.9

(a)The Company does not disclose net sales for any products considered competitively sensitive.

(b)Products disclosed may change in future periods, including as a result of seasonality, competition or new product launches.

(c)Amounts for the three and six months ended June 30, 2023 include the unfavorable impact of foreign currency translations compared to the prior year period.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Variable Consideration and Accounts Receivable

The following table presents a reconciliation of gross sales to net sales by each significant category of variable consideration during the three and six months ended June 30, 2023 and 2022, respectively:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2023		2022		2023		2022
Gross sales	$	6,519.0	$	7,008.7	$	12,792.0	$	14,207.0
Gross to net adjustments:
Chargebacks	(1,374.2)		(1,594.2)		(2,724.9)		(3,178.4)
Rebates, promotional programs and other sales allowances	(961.0)		(1,075.3)		(1,953.2)		(2,281.2)
Returns	(68.3)		(82.7)		(118.7)		(165.3)
Governmental rebate programs	(206.0)		(151.1)		(366.6)		(298.5)
Total gross to net adjustments	$	(2,609.5)	$	(2,903.3)	$	(5,163.4)	$	(5,923.4)
Net sales	$	3,909.5	$	4,105.4	$	7,628.6	$	8,283.6

(a)Amounts for the three and six months ended June 30, 2022 include the biosimilars business which was subsequently contributed to Biocon Biologics in November 2022. The Company has not recognized the results of the biosimilars business in its consolidated financial statements subsequent to November 29, 2022.

No significant revisions were made to the methodology used in determining these provisions or the nature of the provisions during the three and six months ended June 30, 2023. Such allowances were comprised of the following at June 30, 2023 and December 31, 2022, respectively:


(In millions)	June 30, 2023		December 31, 2022
Accounts receivable, net	$	1,575.5	$	1,798.7
Other current liabilities	880.2		888.8
Total	$	2,455.7	$	2,687.5

Accounts receivable, net was comprised of the following at June 30, 2023 and December 31, 2022, respectively:


(In millions)	June 30, 2023		December 31, 2022
Trade receivables, net	$	3,123.7	$	3,243.8
Other receivables	483.6		570.7
Accounts receivable, net	$	3,607.3	$	3,814.5

Accounts Receivable Factoring Arrangements

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 over and risk related to the receivables 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 $188.2 million and $34.7 million of accounts receivable as of June 30, 2023 and December 31, 2022, respectively, under these factoring arrangements.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**3.**Recent Accounting Pronouncements

Adoption of New Accounting Standards

In September 2022, the FASB issued Accounting Standards Update 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50), which requires entities to provide qualitative and quantitative disclosures about their supplier finance programs, including a rollforward of related obligations. The adoption of ASU 2022-04 did not affect the Company’s financial condition, results of operations or cash flows as the guidance only requires additional disclosures. We adopted this ASU effective January 1, 2023.

The Company has certain voluntary supply chain finance programs with financial intermediaries which provide participating suppliers the option to be paid by the intermediary earlier than the original invoice due date. The Company’s responsibility is limited to making payments on the terms originally negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. The range of payment terms the Company negotiates with suppliers are consistent, regardless of whether a supplier participates in a supply chain finance program. The total amounts due to financial intermediaries to settle supplier invoices under supply chain finance programs as of June 30, 2023 and December 31, 2022 were $55.6 million and $33.4 million, respectively. These amounts are included within Accounts payable in the condensed consolidated balance sheets.

There were no other significant changes in new accounting standards from those disclosed in Viatris’ 2022 Form 10-K. Refer to Viatris’ 2022 Form 10-K for additional information.

**4.**Acquisitions and Other Transactions

Oyster Point Acquisition

During the first quarter of 2023, the Company completed the acquisition of Oyster Point for approximately $427.4 million in cash, which included $11 per share paid to Oyster Point stockholders through a tender offer, payment for vested share-based awards, and the repayment of debt of Oyster Point. In addition to the upfront cash consideration, each Oyster Point stockholder received one non-tradeable contingent value right representing up to an additional $2 per share, or approximately $60 million in the aggregate, contingent upon Oyster Point achieving certain metrics based upon full year 2022 performance. Oyster Point did not achieve the metrics that would have triggered a contingent payment and the contingent value rights have expired. Oyster Point is focused on the discovery, development, and commercialization of first-in-class pharmaceutical therapies to treat ophthalmic diseases.

Vested share-based awards to acquire Oyster Point common stock that were outstanding immediately prior to the closing of the acquisition were cancelled in exchange for the right to receive an amount in cash based upon a formula contained within the merger agreement. The unvested share-based awards were converted into Viatris share-based awards based upon a formula contained within the merger agreement.

In accordance with U.S. GAAP, the Company used the acquisition method of accounting to account for this transaction. Under the acquisition method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at their respective estimated fair values at the acquisition date. During the six months ended June 30, 2023, the Company incurred acquisition related costs of approximately $19.8 million, which were recorded primarily in SG&A in the condensed consolidated statement of operations.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

The U.S. GAAP purchase price was $392.7 million, net of cash acquired. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed for Oyster Point is as follows:


(In millions)
Current assets (excluding inventories and net of cash acquired)	$	26.9
Inventories	37.8
Property, plant and equipment	1.4
Identified intangible assets	334.0
Goodwill	5.9
Deferred income tax benefit	17.7
Other assets	7.7
Total assets acquired	$	431.4
Current liabilities	37.0

Other noncurrent liabilities	1.7
Net assets acquired (net of $34.7 of cash acquired)	$	392.7

The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations, valuations and assumptions that are subject to change as the Company obtains additional information during the measurement period (up to one year from the acquisition date). The primary areas subject to change relate to the finalization of the valuation of intangible assets and income taxes. There were no changes to the fair value estimates in the second quarter of 2023.

The Company recorded a step-up in the fair value of inventory of approximately $29.3 million. During the three and six months ended June 30, 2023, the Company recorded amortization of the inventory step-up of approximately $7.3 million and $14.7 million, respectively, which is included in Cost of sales in the condensed consolidated statement of operations.

The identified intangible assets of $334.0 million are comprised of product rights and licenses related to a commercial asset, Tyrvaya®, for the treatment of dry eye disease, that have an estimated useful life of 10 years. Significant assumptions utilized in the valuation of identified intangible assets were based on company specific information and projections which are not observable in the market and are thus considered Level 3 measurements as defined by U.S. GAAP.

The goodwill of $5.9 million arising from the acquisition consisted largely of the value of the employee workforce and the expected value of products to be developed in the future. All of the goodwill was assigned to the Developed Markets segment. None of the goodwill recognized in this transaction is currently expected to be deductible for income tax purposes. The operating results of Oyster Point have been included in the Company’s condensed consolidated statements of operations since the acquisition date. The total revenues of Oyster Point for the period from the acquisition date to June 30, 2023, were $16.5 million and net loss, net of tax, was approximately $85.8 million. The net loss for the period includes the effect of the purchase accounting adjustments and acquisition related costs.

The following table presents supplemental unaudited pro forma information for the acquisition, as if it had occurred on January 1, 2022. The unaudited pro forma results reflect certain adjustments related to past operating performance and acquisition accounting adjustments, such as increased amortization expense based on the fair value of assets acquired, the impact of transaction costs and the related income tax effects. The unaudited pro forma results do not include any anticipated synergies which may be achievable, or have been achieved, subsequent to the closing of the acquisition. Accordingly, the unaudited pro forma results are not necessarily indicative of the results that actually would have occurred had the acquisitions been completed on the stated date above, nor are they indicative of the future operating results of Viatris and its subsidiaries.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


	Three Months Ended				Six Months Ended
(Unaudited, in millions, except per share amounts)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Total revenues	$	3,918.6	$	4,121.5	$	7,647.7	$	8,315.9
Net earnings	$	270.6	$	264.4	$	514.5	$	601.4
Earnings per share:
Basic	$	0.23	$	0.22	$	0.43	$	0.50
Diluted	$	0.22	$	0.22	$	0.43	$	0.49
Weighted average shares outstanding:
Basic	1,199.0		1,212.3		1,200.8		1,211.4
Diluted	1,203.5		1,217.1		1,204.6		1,215.1

Famy Life Sciences Acquisition

On November 7, 2022, the Company entered into a definitive agreement to acquire the remaining equity shares of Famy Life Sciences, a privately-owned research company with a complementary portfolio of ophthalmology therapies under development, for consideration of $281 million. The Company had previously entered into a Master Development Agreement with Famy Life Sciences on December 20, 2019 under which the Company obtained rights with respect to acquiring certain pharmaceutical products and had also acquired shares representing approximately 13.5% equity interest in Famy Life Sciences for $25.0 million at December 31, 2020. The investment was accounted for in accordance with ASC 321, Investments - Equity Securities.

The transaction to acquire the remaining equity shares of Famy Life Sciences closed during the first quarter of 2023. The Company recognized a gain of $18.9 million during the first quarter of 2023 as a result of remeasuring its pre-existing 13.5% equity interest in Famy Life Sciences to fair value, which was recorded as a component of Other (income) expense, net in the condensed consolidated statement of operations.

In accordance with U.S. GAAP, the Company used the acquisition method of accounting to account for this transaction. Under the acquisition method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at their respective estimated fair values at the acquisition date. The U.S. GAAP purchase price allocated to the transaction was $325.0 million, which consisted of $281 million of cash consideration paid for the remaining equity shares and $43.9 million for the fair value of the pre-existing 13.5% equity interest. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed for Famy Life Sciences is as follows:


(In millions)

IPR&D	$	290.0
Goodwill	89.3

Total assets acquired	$	379.3
Current liabilities	2.2
Deferred tax liabilities	52.1
Net assets acquired (net of $0.2 of cash acquired)	$	325.0

The preliminary fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations, valuations and assumptions that are subject to change as the Company obtains additional information during the measurement period (up to one year from the acquisition date). The primary areas subject to change relate to the finalization of the valuation of IPR&D and income taxes. There were no changes to the fair value estimates in the second quarter of 2023.

The amount allocated to IPR&D represents an estimate of the fair value of purchased in-process technology for research projects that, as of the closing date of the acquisition, had not reached technological feasibility and had no alternative future use. The fair value of IPR&D of $290.0 million was based on the excess earnings method, which utilizes forecasts of expected cash inflows (including estimates for ongoing costs) and other contributory charges. A discount rate of 23.9% was utilized to discount net cash inflows to present values. IPR&D is accounted for as an indefinite-lived intangible asset and will be subject to impairment testing until completion or abandonment of the projects. Upon successful completion and launch of

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

each product, the Company will make a determination of the estimated useful life of the individual asset. The acquired IPR&D projects are in various stages of completion and the estimated costs to complete these projects total approximately $120 million, which are expected to be incurred through 2024. There are risks and uncertainties associated with the timely and successful completion of the projects included in IPR&D, and no assurances can be given that the underlying assumptions used to estimate the fair value of IPR&D will not change or the timely completion of each project to commercial success will occur.

The goodwill of $89.3 million arising from the acquisition consisted largely of the value of the employee workforce and the expected value of products to be developed in the future. All of the goodwill was assigned to the Developed Markets segment. None of the goodwill recognized in this transaction is currently expected to be deductible for income tax purposes. The acquisition did not have a material impact on the Company’s results of operations since the acquisition date or on a pro forma basis for the three and six months ended June 30, 2023 and 2022.

Ophthalmology is one of the key therapeutic areas of focus that the Company announced in February 2022 when it announced plans for certain strategic actions. With the combination of Viatris' global commercial footprint, R&D and regulatory capabilities and supply chain, along with Oyster Point's deep knowledge of the ophthalmology space from a clinical, medical, regulatory and commercial perspective—including Tyrvaya®—and Famy Life Sciences' Phase III-ready pipeline, the Company believes it has the foundation to create a leading global ophthalmology franchise, accelerating efforts to address the unmet needs of patients with ophthalmic disease and the eye care professionals who treat them.

Mapi Pharma Ltd. (“Mapi”) Equity Investment

In April 2018, the Company entered into an exclusive license and commercialization agreement with Mapi for the development and commercialization on a world-wide basis of a long-acting glatiramer acetate depot product (“GA Depot”). Under the terms of the license and commercialization agreement, as of June 30, 2023, Mapi is eligible to receive regulatory approval and commercial launch milestone payments of up to $90.0 million. Additionally, upon commercial launch of GA Depot, Mapi is eligible to receive royalties and sales-based milestones.

The Company holds investments in preferred shares of Mapi that are accounted for at cost, less impairment, if any, adjusted for observable price changes, in accordance with ASC 321, Investments – Equity Securities. During the second quarter of 2023, the Company made an additional investment of $30.0 million in preferred shares of Mapi. The preferred shares are convertible on a one-to-one basis into Mapi ordinary shares at Viatris’ option. The Company recognized a gain of $45.6 million during the second quarter of 2023 as a result of remeasuring our pre-existing equity interest in Mapi, which was recorded as a component of Other (Income) Expense, Net in the condensed consolidated statements of operations. The Company has determined that Mapi represents a variable interest entity (“VIE”), but has concluded that Viatris is not the primary beneficiary of Mapi as we do not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Accordingly, we have not consolidated Mapi’s results of operations and financial position into our condensed consolidated financial statements.

As of June 30, 2023 and December 31, 2022, our condensed consolidated balance sheets included, within Other Assets, $132.1 million and $56.4 million, respectively, related to our equity investments in Mapi, which included cumulative unrealized gains of $62.1 million and $16.5 million, respectively, and within Prepaid Expenses and Other Current Assets, $52.5 million and $42.5 million, respectively, related to advances, including for initial orders of commercial launch supply of GA Depot under our supply agreement with Mapi. Our maximum exposure to loss as a result of our involvement with Mapi is limited to the carrying value of the investments and advances.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**5.**Divestitures

Biocon Biologics Transaction

On November 29, 2022, Viatris completed a transaction to contribute its biosimilars portfolio to Biocon Biologics. Under the terms of the Biocon Agreement, Viatris received $3 billion in consideration in the form of a $2 billion cash payment, adjusted as set forth in the Biocon Agreement, and approximately $1 billion of CCPS representing a stake of approximately 12.9% (on a fully diluted basis) in Biocon Biologics. In the second quarter of 2023, the Company recorded a gain of $28.9 million as a result of remeasuring the CCPS in Biocon Biologics to fair value. The Company’s CCPS in Biocon Biologics are classified as equity securities, refer to Note 11 Financial Instruments and Risk Management for further discussion. Viatris also is entitled to $335 million of additional cash payments in 2024. In addition, Viatris and Biocon Biologics have agreed to a closing working capital target of $250 million. An amount of cash equal to all or a portion of the closing working capital target may become payable to Biocon Biologics in connection with certain events in the future, depending on the valuations attributable to such events. Refer to Note 8 Balance Sheet Components for additional information on assets and liabilities related to Biocon Biologics.

Viatris and Biocon Biologics also entered an agreement pursuant to which Viatris is providing commercialization and certain other transition services on behalf of Biocon Biologics, including billings, collections, and the remittance of rebates, to ensure business continuity for patients, customers and colleagues. The original term of the transition services agreement was generally up to two years; however, the parties agreed to reduce the term of the transition services agreement to expire on December 31, 2023, subject to early termination of services at the discretion at Biocon Biologics and/or extensions until April 30, 2024 for certain services. Under the transition services agreement, Viatris is entitled to be reimbursed for its costs (subject to certain caps) plus a markup of $44 million for 2023. In the event services are provided after 2023 through April 30, 2024, Viatris is entitled to be reimbursed for its costs plus service-based markups for such period. During the three and six months ended June 30, 2023, the Company recognized TSA income of approximately $46.9 million and $92.6 million, respectively, as a component of Other (Income) Expense, Net.

Other Potential Divestitures

In November 2022, the Company provided an update on the strategic priorities announced in February 2022, including identifying the following businesses no longer considered core to its future strategy that the Company intends to divest:

OTC;
API (while retaining some selective development API capabilities);
Women’s health care, primarily related to our oral and injectable contraceptives. This does not include all of our women’s health care related products; as an example, our Xulane® product in the U.S. is excluded; and
Upjohn Distributor Markets.

In the fourth quarter of 2022, we determined that our Upjohn Distributor Markets should be classified as held for sale. Upon classification as held for sale, we recognized a total charge of $374.2 million in that quarter, which was comprised of a goodwill impairment charge of $117.0 million, other charges, principally inventory write-offs, of $84.3 million and a charge of approximately $172.9 million to write down the disposal group to fair value, less cost to sell. During the three and six months ended June 30, 2023, the Company recorded additional charges of $10.0 million and $19.2 million, respectively. During the six months ended June 30, 2023, the Company additionally recorded an intangible asset charge of $32.0 million to write down the disposal group to fair value, less cost to sell. As of June 30, 2023 and December 31, 2022, assets held for sale associated with the Upjohn Distributor Markets consisted of intangible assets of $174.9 million and $230.3 million, respectively. If these transactions are not completed, the distribution arrangements will expire in accordance with our agreement with Pfizer and the Company will wind down operations in these markets, which may result in additional asset write-offs and other costs being incurred. These additional charges could be in excess of $250 million.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**6.**Share-Based Incentive Plan

Prior to the Distribution, Viatris adopted and Pfizer, in the capacity as Viatris’ sole stockholder at such time, approved the 2020 Incentive Plan (the Viatris Inc. 2020 Stock Incentive Plan) which became effective as of the Distribution. In connection with the Combination, as of November 16, 2020, the Company assumed the 2003 LTIP (Mylan N.V. Amended and Restated 2003 Long-Term Incentive Plan), which had previously been approved by Mylan shareholders. The 2020 Incentive Plan and 2003 LTIP include (i) 72,500,000 shares of Viatris’ common stock authorized for grant pursuant to the 2020 Incentive Plan, which may include dividend payments payable in common stock on unvested shares granted under awards, (ii) 6,757,640 shares of common stock to be issued pursuant to the exercise of outstanding stock options granted to participants under the 2003 LTIP and assumed by Viatris in connection with the Combination and (iii) 13,535,627 shares of common stock subject to outstanding equity-based awards, other than stock options, assumed by Viatris in connection with the Combination, or that otherwise remain available for issuance under the 2003 LTIP.

Under the 2020 Incentive Plan and 2003 LTIP, shares are reserved for issuance to key employees, consultants, independent contractors and non-employee directors of the Company through a variety of incentive awards, including: stock options, SARs, restricted stock and units, PSUs, other stock-based awards and short-term cash awards. Stock option awards are granted with an exercise price equal to the fair market value of the shares underlying the stock options at the date of the grant, generally become exercisable over periods ranging from three to four years, and generally expire in ten years.

The following table summarizes stock awards (stock options and SARs) activity under the 2020 Incentive Plan and 2003 LTIP:


	Number of Shares Under Stock Awards	Weighted Average Exercise Price per Share
Outstanding at December 31, 2022	4,449,642	$	38.53
Granted	283,361	$	7.68
Exercised	(9,125)	$	5.67
Forfeited	(335,798)	$	31.42
Outstanding at June 30, 2023	4,388,080	$	37.15
Vested and expected to vest at June 30, 2023	4,361,367	$	37.31
Exercisable at June 30, 2023	4,151,296	$	38.72

As of June 30, 2023, stock awards outstanding, stock awards vested and expected to vest and stock awards exercisable had average remaining contractual terms of 4.2 years, 4.1 years and 3.9 years, respectively. Also, at June 30, 2023, stock awards outstanding, stock awards vested and expected to vest and stock awards exercisable had aggregate intrinsic values of $0.6 million, $0.6 million, and $0.2 million, respectively.

A rollforward of the changes in the Company’s nonvested Restricted Stock Awards (restricted stock and restricted stock unit awards, including PSUs) from December 31, 2022 to June 30, 2023 is presented below:


	Number of Restricted Stock Awards	Weighted Average Grant-Date Fair Value Per Share
Nonvested at December 31, 2022	27,271,926	$	11.81
Granted	20,286,212	11.16
Released	(7,797,097)	13.03
Forfeited	(2,101,991)	11.65
Nonvested at June 30, 2023	37,659,050	$	11.21

As of June 30, 2023, the Company had $285.5 million of total unrecognized compensation expense, net of estimated forfeitures, related to all of its stock-based awards, which we expect to recognize over the remaining weighted average vesting period of 1.6 years. The total intrinsic value of Restricted Stock Awards released during the six months ended June 30, 2023 and 2022 was $101.6 million and $64.1 million, respectively.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**7.**Pensions and Other Postretirement Benefits

Defined Benefit Plans

The Company sponsors various defined benefit pension plans in several countries. Benefits provided generally depend on length of service, pay grade and remuneration levels. Employees in the U.S., Puerto Rico and certain international locations are also provided retirement benefits through defined contribution plans.

The Company also sponsors other postretirement benefit plans including plans that provide for postretirement supplemental medical coverage. Benefits from these plans are provided to employees and their spouses and dependents who meet various minimum age and service requirements. In addition, the Company sponsors other plans that provide for life insurance benefits and postretirement medical coverage for certain officers and management employees.

Net Periodic Benefit Cost

Components of net periodic benefit cost for the three and six months ended June 30, 2023 and 2022 were as follows:


	Pension and Other Postretirement Benefits
	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2023		2022		2023		2022
Service cost	$	7.1	$	9.5	$	14.2	$	19.0
Interest cost	18.2		10.4		36.5		20.8
Expected return on plan assets	(16.4)		(16.6)		(32.8)		(33.2)
Amortization of prior service costs	—		—		—		0.1
Recognized net actuarial (gains)/losses	(5.0)		0.1		(10.0)		0.1
Other	4.4		—		4.4		—
Net periodic benefit cost	$	8.3	$	3.4	$	12.3	$	6.8

The Company is making the minimum mandatory contributions to its defined benefit pension plans in the U.S. and Puerto Rico for the 2023 plan year. The Company expects to make total benefit payments of approximately $108.5 million from pension and other postretirement benefit plans in 2023. The Company anticipates making contributions to pension and other postretirement benefit plans of approximately $51.3 million in 2023.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**8.**Balance Sheet Components

Selected balance sheet components consist of the following:

Cash and restricted cash


(In millions)	June 30, 2023		December 31, 2022		June 30, 2022
Cash and cash equivalents	$	629.2	$	1,259.9	$	664.7
Restricted cash, included in prepaid expenses and other current assets	2.2		2.6		4.7
Cash, cash equivalents and restricted cash	$	631.4	$	1,262.5	$	669.4

Inventories


(In millions)	June 30, 2023		December 31, 2022
Raw materials	$	417.5	$	571.5
Work in process	1,132.2		755.4
Finished goods	2,091.8		2,192.6
Inventories	$	3,641.5	$	3,519.5

Prepaid expenses and other current assets


(In millions)	June 30, 2023		December 31, 2022
Prepaid expenses	$	205.8	$	194.6

Deferred consideration due from Biocon Biologics	164.8		—
Available-for-sale fixed income securities	35.5		35.3
Fair value of financial instruments	94.6		134.7
Equity securities	46.7		42.6
Other current assets	1,177.7		1,404.0
Prepaid expenses and other current assets	$	1,725.1	$	1,811.2

Prepaid expenses consist primarily of prepaid rent, insurance and other individually insignificant items.

Property, plant and equipment, net


(In millions)	June 30, 2023		December 31, 2022
Machinery and equipment	$	3,011.0	$	2,936.7
Buildings and improvements	1,502.8		1,539.7
Construction in progress	407.3		474.0
Land and improvements	125.1		133.4
Gross property, plant and equipment	5,046.2		5,083.8
Accumulated depreciation	2,063.0		2,059.3
Property, plant and equipment, net	$	2,983.2	$	3,024.5

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Other assets


(In millions)	June 30, 2023		December 31, 2022

Non-marketable equity investments	$	154.2	$	94.0
Deferred consideration due from Biocon Biologics	146.1		299.5
CCPS in Biocon Biologics	1,028.9		997.4
Operating lease right-of-use assets	250.4		259.3
Other long-term assets	771.5		753.3
Other assets	$	2,351.1	$	2,403.5

Accounts payable


(In millions)	June 30, 2023		December 31, 2022
Trade accounts payable	$	1,309.6	$	1,158.0
Other payables	652.4		608.6
Accounts payable	$	1,962.0	$	1,766.6

Other current liabilities


(In millions)	June 30, 2023		December 31, 2022
Accrued sales allowances	$	880.2	$	888.8
Legal and professional accruals, including litigation accruals	252.1		297.2
Payroll and employee benefit liabilities	672.0		746.8
Contingent consideration	63.7		64.4
Accrued restructuring	47.2		95.3
Accrued interest	64.2		80.2
Fair value of financial instruments	98.7		187.0
Due to Biocon Biologics	11.6		22.5
Operating lease liability	85.3		80.6
Other	871.1		978.1
Other current liabilities	$	3,046.1	$	3,440.9

Other long-term obligations


(In millions)	June 30, 2023		December 31, 2022
Employee benefit liabilities	$	530.5	$	544.6
Contingent consideration (1)	315.4		310.6

Tax related items, including contingencies	393.1		414.6
Operating lease liability	166.9		181.4
Accrued restructuring	60.4		60.4
Other	208.0		244.9
Other long-term obligations	$	1,674.3	$	1,756.5

(1) Balances as of June 30, 2023 and December 31, 2022 include $228.4 million and $221.2 million, respectively, due to Biocon Biologics. Refer to Note 11 Financial Instruments and Risk Management for additional information.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**9.**Earnings per Share

Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding related to potentially dilutive securities or instruments, if the impact is dilutive.

Basic and diluted earnings per share attributable to Viatris Inc. are calculated as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share amounts)	2023		2022		2023		2022
Basic earnings attributable to Viatris Inc. common shareholders
Net earnings attributable to Viatris Inc. common shareholders	$	264.0	$	313.9	$	488.7	$	713.1
Shares (denominator):
Weighted average shares outstanding	1,199.0		1,212.3		1,200.8		1,211.4
Basic earnings per share attributable to Viatris Inc. shareholders	$	0.22	$	0.26	$	0.41	$	0.59

Diluted earnings attributable to Viatris Inc. common shareholders
Net earnings attributable to Viatris Inc. common shareholders	$	264.0	$	313.9	$	488.7	$	713.1
Shares (denominator):
Weighted average shares outstanding	1,199.0		1,212.3		1,200.8		1,211.4
Share-based awards	4.5		4.8		3.8		3.7
Total dilutive shares outstanding	1,203.5		1,217.1		1,204.6		1,215.1
Diluted earnings per share attributable to Viatris Inc. shareholders	$	0.22	$	0.26	$	0.41	$	0.59

Additional stock awards and Restricted Stock Awards were outstanding during the three and six months ended June 30, 2023 and 2022, but were not included in the computation of diluted earnings per share for each respective period because the effect would be anti-dilutive. Excluded shares at June 30, 2023 include certain share-based compensation awards whose performance conditions had not been fully met. Such excluded shares and anti-dilutive awards represented 24.2 million shares and 19.0 million shares for the three and six months ended June 30, 2023, respectively, and 9.8 million shares and 12.6 million shares for the three and six months ended June 30, 2022, respectively.

The Company paid a quarterly dividend of $0.12 per share on the Company’s issued and outstanding common stock on March 17, 2023 and June 16, 2023. On August 4, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.12 per share on the Company’s issued and outstanding common stock, which will be payable on September 15, 2023 to shareholders of record as of the close of business on August 24, 2023. 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.

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. 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 six months ended June 30, 2023, the Company repurchased approximately 21.2 million shares of common stock at a cost of approximately $250 million. The Company did not repurchase any shares of common stock under the share repurchase program in 2022. The share repurchase program does not obligate the Company to acquire any particular amount of common stock.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**10.**Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the six months ended June 30, 2023 are as follows:


(In millions)	Developed Markets (1)		Greater China		JANZ		Emerging Markets (2)		Total



Balance at December 31, 2022:	7,461.5		940.6		689.0		1,334.7		10,425.8
Acquisitions	95.3		—		—		—		95.3

Foreign currency translation	42.8		(4.0)		(21.5)		(5.9)		11.4
Balance at June 30, 2023:	$	7,599.6	$	936.6	$	667.5	$	1,328.8	$	10,532.5

(1)Balances as of June 30, 2023 and December 31, 2022 include an accumulated impairment loss of $385.0 million.

(2)Balances as of June 30, 2023 and December 31, 2022 include an accumulated impairment loss of $117.0 million.

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, 2023.

The Company performed its annual goodwill impairment test on a quantitative basis for its five reporting units, North America, Europe, Emerging Markets, JANZ, and Greater China. In estimating each reporting unit’s fair value, the Company performed an extensive valuation analysis, utilizing a discounted cash flow approach. The determination of the fair value of the reporting units requires the Company to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions, utilizing Level 3 inputs, primarily include, but are not limited to, the discount rate, terminal growth rates, operating income before depreciation and amortization, capital expenditures forecasts and control premiums.

When compared to the prior year’s annual goodwill impairment test completed on April 1, 2022, the Company has experienced significant fluctuations in foreign exchange rates in certain international markets, combined with a significant increase in market interest rates. These market factors have caused the discount rate utilized in all our reporting units to increase between 1.0% to 4.5%, resulting in a significant reduction in the calculated fair values at April 1, 2023 for all our reporting units. Also, in conjunction with the Company’s annual strategic planning process which included determining long-term growth rate targets for our business, operational results during the forecast period were reduced and long-term growth rates were increased. As a result of these changes, the calculated fair values of the North America, Greater China and Europe reporting units declined in excess of 10% and the JANZ and Emerging Markets reporting units declined in excess of 15% when compared to the prior year fair values.

As of April 1, 2023, the allocation of the Company’s total goodwill was as follows: North America $3.15 billion, Europe $4.47 billion, Emerging Markets $1.34 billion, JANZ $0.68 billion and Greater China $0.94 billion.

As of April 1, 2023, the Company determined that the fair value of the North America and Greater China reporting units was substantially in excess of the respective unit’s carrying value.

For the Europe reporting unit, the estimated fair value exceeded its carrying value by approximately $535 million or 3.9% for the annual goodwill impairment test. As it relates to the discounted cash flow approach for the Europe reporting unit at April 1, 2023, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 2.4%. A terminal year value was calculated with a 2.0% revenue growth rate applied. The discount rate utilized was 11.0% and the estimated tax rate was 14.9%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 1.0% or an increase in discount rate by 0.5% would result in an impairment charge for the Europe reporting unit.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

For the JANZ reporting unit, the estimated fair value exceeded its carrying value by approximately $145 million or 5.5% for the annual goodwill impairment test. As it relates to the discounted cash flow approach for the JANZ reporting unit at April 1, 2023, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately negative 2.0%. A terminal year value was calculated with a 1.5% revenue growth rate applied. The discount rate utilized was 7.0% and the estimated tax rate was 30.6%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 0.5% or an increase in discount rate by 0.5% would result in an impairment charge for the JANZ reporting unit.

For the Emerging Markets reporting unit, the estimated fair value exceeded its carrying value by approximately $513 million or 7.7% for the annual goodwill impairment test. As it relates to the discounted cash flow approach for the Emerging Markets reporting unit at April 1, 2023, the Company forecasted cash flows for the next 10 years. During the forecast period, the revenue compound annual growth rate was approximately 1.8%. A terminal year value was calculated with a 2.0% revenue growth rate applied. The discount rate utilized was 11.5% and the estimated tax rate was 17.4%. If all other assumptions are held constant, a reduction in the terminal value growth rate by 2.5% or an increase in discount rate by 1.0% would result in an impairment charge for the Emerging Markets reporting unit.

Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. In addition, changes in underlying assumptions, especially as they relate to the key assumptions detailed, could have a significant impact on the fair value of the reporting units.

Intangible Assets, Net

Intangible assets consist of the following components at June 30, 2023 and December 31, 2022:


(In millions)	Weighted Average Life (Years)	Original Cost		Accumulated Amortization		Net Book Value
June 30, 2023
Product rights, licenses and other (1)	15	$	37,929.8	$	16,176.7	$	21,753.1
In-process research and development		331.3		—		331.3
		$	38,261.1	$	16,176.7	$	22,084.4
December 31, 2022
Product rights, licenses and other (1)	15	$	37,490.5	$	14,923.6	$	22,566.9
In-process research and development		40.2		—		40.2
		$	37,530.7	$	14,923.6	$	22,607.1

(1)Represents amortizable intangible assets. Other intangible assets consists principally of customer lists and contractual rights.

During the six months ended June 30, 2023, the Company acquired product rights and licenses from Oyster Point of approximately $334.0 million, and IPR&D of approximately $290.0 million from Famy Life Sciences. Refer to Note 4

Acquisitions and Other Transactions for additional information.

Amortization expense and intangible asset disposal & impairment charges (which are included as a component of amortization expense) are classified primarily within cost of sales in the condensed consolidated statements of operations and were as follows for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)	2023		2022		2023		2022
Intangible asset amortization expense	$	591.2	$	634.1	$	1,194.5	$	1,282.2
Intangible asset disposal & impairment charges	—		—		32.0		—

Total intangible asset amortization expense (including disposal & impairment charges)	$	591.2	$	634.1	$	1,226.5	$	1,282.2

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

During the six months ended June 30, 2023, the Company recognized an intangible asset charge of approximately $32.0 million, which was recorded within Cost of sales in the condensed consolidated statement of operations, to write down the disposal group to fair value, less cost to sell, related to our Upjohn Distributor Markets, which are classified as held for sale. As of June 30, 2023 and December 31, 2022, the Company has approximately $174.9 million and $230.3 million, respectively, of intangible assets related to the Upjohn Distributor Markets that are classified as held for sale in the condensed consolidated balance sheets. Refer to Note 5 Divestitures for additional information.

Intangible asset amortization expense over the remainder of 2023 and for the years ending December 31, 2024 through 2027 is estimated to be as follows:


(In millions)
2023	$	1,182
2024	2,271
2025	2,177
2026	2,121
2027	1,909

**11.**Financial Instruments and Risk Management

The Company is exposed to certain financial risks relating to its ongoing business operations. The primary financial risks that are managed by using derivative instruments are foreign currency risk and interest rate risk.

Foreign Currency Risk Management

In order to manage certain foreign currency risks, the Company enters into foreign exchange forward contracts to mitigate risk associated with changes in spot exchange rates of mainly non-functional currency denominated assets or liabilities. The foreign exchange forward contracts are measured at fair value and reported as current assets or current liabilities in the condensed consolidated balance sheets. Any gains or losses on the foreign exchange forward contracts are recognized in earnings in the period incurred in the condensed consolidated statements of operations.

The Company has also entered into forward contracts to hedge forecasted foreign currency denominated sales from certain international subsidiaries and a portion of forecasted intercompany inventory sales denominated in Euro, Japanese Yen, Chinese Renminbi and Indian Rupee for up to twenty-four months. These contracts are designated as cash flow hedges to manage foreign currency transaction risk and are measured at fair value and reported as current assets or current liabilities in the condensed consolidated balance sheets. Any changes in the fair value of designated cash flow hedges are deferred in AOCE and are reclassified into earnings when the hedged item impacts earnings.

Net Investment Hedges

The Company may hedge the foreign currency risk associated with certain net investment positions in foreign subsidiaries by either borrowing directly in foreign currencies and designating all or a portion of the foreign currency debt as a hedge of the applicable net investment position or entering into foreign currency swaps that are designated as hedges of net investments.

The Company has designated certain Euro and Yen borrowings as a hedge of its investment in certain Euro-functional and Yen-functional currency subsidiaries in order to manage foreign currency translation risk. Borrowings designated as net investment hedges are marked-to-market using the current spot exchange rate as of the end of the period, with gains and losses included in the foreign currency translation component of AOCE until the sale or substantial liquidation of the underlying net investments. In addition, the Company manages the related foreign exchange risk of the Euro and Yen borrowings not designated as net investment hedges through certain Euro and Yen denominated financial assets and forward currency swaps.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

The following table summarizes the principal amounts of the Company’s outstanding Euro and Yen borrowings and the notional amounts of the Euro and Yen borrowings designated as net investment hedges:


			Notional Amount Designated as a Net Investment Hedge
(In millions)	Principal Amount		June 30, 2023		December 31, 2022
2.250% Euro Senior Notes due 2024	€	1,000.0	€	1,000.0	€	1,000.0
3.125% Euro Senior Notes due 2028	750.0		750.0		750.0
2.125% Euro Senior Notes due 2025	500.0		500.0		500.0
1.023% Euro Senior Notes due 2024	750.0		750.0		750.0
1.362% Euro Senior Notes due 2027	850.0		850.0		850.0
1.908% Euro Senior Notes due 2032	1,250.0		1,250.0		1,250.0

Total	€	5,100.0	€	5,100.0	€	5,100.0

Yen
YEN Term Loan	¥	40,000.0	¥	40,000.0	¥	40,000.0
Yen Total	¥	40,000.0	¥	40,000.0	¥	40,000.0

At June 30, 2023, the principal amount of the Company’s outstanding Yen borrowings and the notional amount of the Yen borrowings designated as net investment hedges was $277.2 million.

Interest Rate Risk Management

The Company enters into interest rate swaps from time to time in order to manage interest rate risk associated with the Company’s fixed-rate and floating-rate debt. Interest rate swaps that meet specific accounting criteria are accounted for as fair value or cash flow hedges. All derivative instruments used to manage interest rate risk are measured at fair value and reported as current assets or current liabilities in the condensed consolidated balance sheets. For fair value hedges, the changes in the fair value of both the hedging instrument and the underlying debt obligations are included in interest expense. For cash flow hedges, the change in fair value of the hedging instrument is deferred through AOCE and is reclassified into earnings when the hedged item impacts earnings.

Credit Risk Management

The Company regularly reviews the creditworthiness of its financial counterparties and does not expect to incur a significant loss from the failure of any counterparties to perform under any agreements. The Company is not subject to any obligations to post collateral under derivative instrument contracts. Certain derivative instrument contracts entered into by the Company are governed by master agreements, which contain credit-risk-related contingent features that would allow the counterparties to terminate the contracts early and request immediate payment should the Company trigger an event of default on other specified borrowings. The Company records all derivative instruments on a gross basis in the condensed consolidated balance sheets. Accordingly, there are no offsetting amounts that net assets against liabilities.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

The following table summarizes the classification and fair values of derivative instruments in our condensed consolidated balance sheets:


	Asset Derivatives					Liability Derivatives
(In millions)	Balance Sheet Location	June 30, 2023 Fair Value		December 31, 2022 Fair Value		Balance Sheet Location	June 30, 2023 Fair Value		December 31, 2022 Fair Value
Derivatives designated as hedges:

Foreign currency forward contracts	Prepaid expenses & other current assets	$	44.8	$	30.4	Other current liabilities	$	6.0	$	26.4
Total derivatives designated as hedges		44.8		30.4			6.0		26.4
Derivatives not designated as hedges:
Foreign currency forward contracts	Prepaid expenses & other current assets	49.8		104.3		Other current liabilities	92.7		160.6
Total derivatives not designated as hedges		49.8		104.3			92.7		160.6
Total derivatives		$	94.6	$	134.7		$	98.7	$	187.0

The following table summarizes information about the gains/(losses) incurred to hedge or offset operational foreign exchange or interest rate risk:


		Amount of Gains/(Losses) Recognized in Earnings				Amount of Gains/(Losses) Recognized in AOCE (Net of Tax) on Derivatives				Amount of Gains/(Losses) Reclassified from AOCE into Earnings
		Three months ended June 30,
(In millions)	Location of Gain/(Loss)	2023		2022		2023		2022		2023		2022



Derivative Financial Instruments in Cash Flow Hedging Relationships (1) :
Foreign currency forward contracts	Net sales (3)	$	—	$	—	$	32.4	$	33.1	$	7.8	$	28.1
Interest rate swaps	Interest expense (3)	—		—		(0.9)		(0.8)		(1.1)		(1.1)
Non-derivative Financial Instruments in Net Investment Hedging Relationships:
Foreign currency borrowings		—		—		(10.1)		298.6		—		—
Derivative Financial Instruments Not Designated as Hedging Instruments:
Foreign currency option and forward contracts	Other (income) expense, net (2)	(31.4)		53.1		—		—		—		—
Total		$	(31.4)	$	53.1	$	21.4	$	330.9	$	6.7	$	27.0

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


		Amount of Gains/(Losses) Recognized in Earnings				Amount of Gains/(Losses) Recognized in AOCE (Net of Tax) on Derivatives				Amount of Gains/(Losses) Reclassified from AOCE into Earnings
		Six months ended June 30,
(In millions)	Location of Gain/(Loss)	2023		2022		2023		2022		2023		2022



Derivative Financial Instruments in Cash Flow Hedging Relationships (1) :
Foreign currency forward contracts	Net sales (3)	$	—	$	—	$	43.5	$	42.8	$	16.7	$	42.3
Interest rate swaps	Interest expense (3)	—		—		(1.8)		(1.7)		(2.3)		(2.2)
Non-derivative Financial Instruments in Net Investment Hedging Relationships:
Foreign currency borrowings		—		—		(62.0)		454.9		—		—
Derivative Financial Instruments Not Designated as Hedging Instruments:
Foreign currency option and forward contracts	Other (income) expense, net (2)	13.2		74.8		—		—		—		—
Total		$	13.2	$	74.8	$	(20.3)	$	496.0	$	14.4	$	40.1

(1)At June 30, 2023, the Company expects that approximately $4.0 million of pre-tax net gains on cash flow hedges will be reclassified from AOCE into earnings during the next twelve months.

(2)Represents the location of the gain/(loss) recognized in earnings on derivatives.

(3)Represents the location of the gain/(loss) reclassified from AOCE into earnings.

Fair Value Measurement

Fair value is based on the price that would be received from the sale of an identical asset or paid to transfer an identical liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, a fair value hierarchy has been established that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

*•*Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

*•*Level 2: Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.

*•*Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as considers counterparty credit risk in its assessment of fair value.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Financial assets and liabilities carried at fair value are classified in the tables below in one of the three categories described above:


	June 30, 2023						December 31, 2022
(In millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Recurring fair value measurements
Financial Assets
Cash equivalents:
Money market funds	$	222.9	$	—	$	—	$	688.8	$	—	$	—
Total cash equivalents	222.9		—		—		688.8		—		—
Equity securities:
Exchange traded funds	46.5		—		—		42.4		—		—
Marketable securities	0.2		—		—		0.2		—		—
Total equity securities	46.7		—		—		42.6		—		—
CCPS in Biocon Biologics	—		—		1,028.9		—		—		997.4
Available-for-sale fixed income investments:
Corporate bonds	—		15.5		—		—		13.2		—
U.S. Treasuries	—		9.7		—		—		11.7		—
Agency mortgage-backed securities	—		4.8		—		—		4.7		—
Asset backed securities	—		5.4		—		—		5.1		—
Other	—		0.1		—		—		0.6		—
Total available-for-sale fixed income investments	—		35.5		—		—		35.3		—
Foreign exchange derivative assets	—		94.6		—		—		134.7		—

Total assets at recurring fair value measurement	$	269.6	$	130.1	$	1,028.9	$	731.4	$	170.0	$	997.4
Financial Liabilities

Foreign exchange derivative liabilities	—		98.7		—		—		187.0		—
Contingent consideration	—		—		379.1		—		—		375.0
Total liabilities at recurring fair value measurement	$	—	$	98.7	$	379.1	$	—	$	187.0	$	375.0

For financial assets and liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including interest rate yield curves, foreign exchange forward prices and bank price quotes. Below is a summary of valuation techniques for the Company’s financial assets and liabilities:

Cash equivalents — valued at observable net asset value prices.
Equity securities, exchange traded funds — valued at the active quoted market prices from broker or dealer quotations or transparent pricing sources at the reporting date. Unrealized gains and losses attributable to changes in fair value are included in Other (income) expense, net in the condensed consolidated statements of operations.
Equity securities, marketable securities — valued using quoted stock prices from public exchanges at the reporting date. Unrealized gains and losses attributable to changes in fair value are included in Other (income) expense, net in the condensed consolidated statements of operations.
CCPS in Biocon Biologics — valued using a Monte Carlo simulation model using Level 3 inputs. The fair value of the CCPS is sensitive to changes in the forecasts of operating metrics, changes in volatility and discount rates, and share dilution. The Company elected the fair value option for the CCPS under ASC 825. The fair value is reassessed quarterly and any change in the fair value estimate is recorded in Other (income) expense, net, in the condensed consolidated statements of operations for that period.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

*•*Available-for-sale fixed income investments — valued at the quoted market prices from broker or dealer quotations or transparent pricing sources at the reporting date. Unrealized gains and losses attributable to changes in fair value, net of income taxes, are included in accumulated other comprehensive loss as a component of shareholders’ equity.

Foreign exchange derivative assets and liabilities — valued using quoted forward foreign exchange prices and spot rates at the reporting date. Counterparties to these contracts are highly rated financial institutions.

Contingent Consideration

As of June 30, 2023 and December 31, 2022, the Company had a contingent consideration liability of $228.4 million and $221.2 million, respectively, relating to the Biocon Biologics Transaction. This contingent consideration liability represents the amount of the closing working capital target to which the parties have agreed that may become payable to Biocon Biologics in connection with certain events in the future, depending on the valuations attributable to such events. The remaining contingent consideration liability represents a component of the total purchase consideration for Pfizer’s Respiratory Delivery Platform and certain other acquisitions. The measurement of these contingent consideration liabilities is calculated using unobservable Level 3 inputs based on the Company’s own assumptions primarily related to the probability and timing of future events and payments which are discounted using a market rate of return. At June 30, 2023 and December 31, 2022, discount rates ranging from 6.4% to 9.0% were utilized in the valuations. Significant changes in unobservable inputs could result in material changes to the contingent consideration liability.

A rollforward of the activity in the Company’s fair value of contingent consideration from December 31, 2022 to June 30, 2023 is as follows:


(In millions)	Current Portion (1)		Long-Term Portion (2)		Total Contingent Consideration
Balance at December 31, 2022	$	64.4	$	310.6	$	375.0
Payments	(22.9)		—		(22.9)
Reclassifications	22.2		(22.2)		—
Accretion	—		11.5		11.5
Fair value loss (3)	—		15.5		15.5
Balance at June 30, 2023	$	63.7	$	315.4	$	379.1

(1)Included in other current liabilities in the condensed consolidated balance sheets.

(2)Included in other long-term obligations in the condensed consolidated balance sheets.

(3)Included in litigation settlements and other contingencies, net in the condensed consolidated statements of operations.

Although the Company has not elected the fair value option for other financial assets and liabilities other than the CCPS, any future transacted financial asset or liability will be evaluated for the fair value election.

**12.**Debt

For additional information, see Note 11 Debt in Viatris’ 2022 Form 10-K.

Receivables Facility and Note Securitization Facility

The Company has a $400 million Receivables Facility, which expires in April 2025 and a $200 million Note Securitization Facility which expires in August 2023. 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. Amounts outstanding under either facility are included as a component of short-term borrowings, while the accounts receivables securing these obligations remain as a component of accounts receivable, net, in our condensed consolidated balance sheets.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Long-Term Debt

Effective April 28, 2023, we executed an amendment to the Revolving Facility to convert the benchmark interest rate from LIBOR to an adjusted SOFR, with no change in the applicable interest rate margins.

A summary of long-term debt is as follows:


($ in millions)	Interest Rate as of June 30, 2023		June 30, 2023		December 31, 2022
Current portion of long-term debt:


2023 Senior Notes (a) *	3.125	%	$	—	$	750.6
2023 Senior Notes *	4.200	%	499.9		499.8
2024 Euro Senior Notes ****	1.023	%	825.3		—
Other			0.7		0.7
Deferred financing fees			(0.3)		(0.6)
Current portion of long-term debt			$	1,325.6	$	1,250.5

Non-current portion of long-term debt:


2024 Euro Senior Notes **	2.250	%	1,090.4		1,069.8
2024 Euro Senior Notes ****	1.023	%	—		813.5
2025 Euro Senior Notes *	2.125	%	545.1		534.8
2025 Senior Notes ***	1.650	%	757.7		759.6
2026 Senior Notes **	3.950	%	2,244.2		2,243.2
2027 Euro Senior Notes ****	1.362	%	959.8		945.9
2027 Senior Notes ***	2.300	%	772.6		775.3
2028 Euro Senior Notes **	3.125	%	814.1		798.5
2028 Senior Notes *	4.550	%	749.0		748.9
2030 Senior Notes ***	2.700	%	1,508.9		1,512.8
2032 Euro Senior Notes ****	1.908	%	1,466.5		1,444.4
2040 Senior Notes ***	3.850	%	1,647.3		1,650.6
2043 Senior Notes *	5.400	%	497.4		497.4
2046 Senior Notes **	5.250	%	999.9		999.9
2048 Senior Notes *	5.200	%	747.8		747.8
2050 Senior Notes ***	4.000	%	2,198.5		2,200.8
YEN Term Loan Facility	Variable		277.2		305.1
Other			2.2		2.0
Deferred financing fees			(32.6)		(35.1)
Long-term debt			$	17,246.0	$	18,015.2

(a) In the first quarter of 2020, the Company terminated interest rate swaps designated as a fair value hedge resulting in net proceeds of approximately $45 million. The fair value adjustment was amortized to interest expense over the remaining term of the notes, which were repaid at maturity in the first quarter of 2023.

Instrument was issued by Mylan Inc.

** Instrument was originally issued by Mylan N.V.; now held by Utah Acquisition Sub Inc.

*** Instrument was issued by Viatris Inc.

**** Instrument was issued by Upjohn Finance B.V.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

At June 30, 2023 and December 31, 2022, the aggregate fair value of the Company’s outstanding notes was approximately $15.03 billion and $15.36 billion, respectively. The fair values of the outstanding notes were valued at quoted market prices from broker or dealer quotations and were classified as Level 2 in the fair value hierarchy.

Mandatory minimum repayments remaining on the notional amount of outstanding long-term debt at June 30, 2023 were as follows for each of the periods ending December 31:


(In millions)	Total
2023	$	500
2024	1,909
2025	1,295
2026	2,527
2027	1,677
Thereafter	10,132
Total	$	18,040

**13.**Comprehensive Loss

Accumulated other comprehensive loss, as reflected in the condensed consolidated balance sheets, is comprised of the following:


(In millions)	June 30, 2023		December 31, 2022
Accumulated other comprehensive loss:
Net unrealized loss on marketable securities, net of tax	$	(1.3)	$	(2.3)
Net unrecognized gain and prior service cost related to defined benefit plans, net of tax	264.5		268.5
Net unrecognized loss on derivatives in cash flow hedging relationships, net of tax	10.9		(18.5)
Net unrecognized gain on derivatives in net investment hedging relationships, net of tax	315.0		377.0
Foreign currency translation adjustment	(3,594.7)		(3,385.9)
	$	(3,005.6)	$	(2,761.2)

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Components of accumulated other comprehensive loss, before tax, consist of the following, for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023
Gains and Losses on Derivatives in Cash Flow Hedging Relationships					Gains and Losses on Net Investment Hedges			Gains and Losses on Marketable Securities			Defined Pension Plan Items			Foreign Currency Translation Adjustment			Totals
(In millions)	Foreign Currency Forward Contracts	Interest Rate Swaps	Total
Balance at March 31, 2023, net of tax			$	(16.8)		$	325.1		$	(1.6)		$	269.3		$	(3,340.6)		$	(2,764.6)
Other comprehensive earnings (loss) before reclassifications, before tax			43.5			(12.8)			0.2			3.8			(254.1)			(219.4)
Amounts reclassified from accumulated other comprehensive (loss) earnings, before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales	(7.8)		(7.8)															(7.8)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense		1.1	1.1															1.1
Gain on divestiture of defined pension plan included in SG&A												(5.6)						(5.6)

Amortization of actuarial gain included in SG&A												(5.0)						(5.0)
Net other comprehensive earnings (loss), before tax			36.8			(12.8)			0.2			(6.8)			(254.1)			(236.7)
Income tax provision (benefit)			9.1			(2.7)			(0.1)			(2.0)			—			4.3

Balance at June 30, 2023, net of tax			$	10.9		$	315.0		$	(1.3)		$	264.5		$	(3,594.7)		$	(3,005.6)

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


	Six Months Ended June 30, 2023
Gains and Losses on Derivatives in Cash Flow Hedging Relationships					Gains and Losses on Net Investment Hedges			Gains and Losses on Marketable Securities			Defined Pension Plan Items			Foreign Currency Translation Adjustment			Totals
(In millions)	Foreign Currency Forward Contracts	Interest Rate Swaps	Total
Balance at December 31, 2022, net of tax			$	(18.5)		$	377.0		$	(2.3)		$	268.5		$	(3,385.9)		$	(2,761.2)
Other comprehensive earnings (loss) before reclassifications, before tax			54.0			(79.0)			1.1			10.1			(208.8)			(222.6)
Amounts reclassified from accumulated other comprehensive (loss) earnings, before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales	(16.7)		(16.7)															(16.7)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense		2.3	2.3															2.3
Gain on divestiture of defined pension plan included in SG&A												(5.6)						(5.6)

Amortization of actuarial gain included in SG&A												(10.0)						(10.0)
Net other comprehensive earnings (loss), before tax			39.6			(79.0)			1.1			(5.5)			(208.8)			(252.6)
Income tax provision (benefit)			10.2			(17.0)			0.1			(1.5)			—			(8.2)

Balance at June 30, 2023, net of tax			$	10.9		$	315.0		$	(1.3)		$	264.5		$	(3,594.7)		$	(3,005.6)

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


	Three months ended June 30, 2022
Gains and Losses on Derivatives in Cash Flow Hedging Relationships					Gains and Losses on Net Investment Hedges			Gains and Losses on Marketable Securities			Defined Pension Plan Items			Foreign Currency Translation Adjustment			Totals
(In millions)	Foreign Currency Forward Contracts	Interest Rate Swaps	Total
Balance at March 31, 2022, net of tax			$	9.4		$	173.1		$	(1.3)		$	29.4		$	(2,271.6)		$	(2,061.0)
Other comprehensive earnings (loss) before reclassifications, before tax			44.6			384.4			(1.0)			0.4			(1,149.9)			(721.5)
Amounts reclassified from accumulated other comprehensive (loss) earnings, before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales	(28.1)		(28.1)															(28.1)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense		1.1	1.1															1.1

Amortization of actuarial loss included in SG&A												0.1						0.1
Net other comprehensive earnings (loss), before tax			17.6			384.4			(1.0)			0.5			(1,149.9)			(748.4)
Income tax provision (benefit)			4.3			85.9			(0.2)			(0.2)			—			89.8

Balance at June 30, 2022, net of tax			$	22.7		$	471.6		$	(2.1)		$	30.1		$	(3,421.5)		$	(2,899.2)

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


	Six Months Ended June 30, 2022
Gains and Losses on Derivatives in Cash Flow Hedging Relationships					Gains and Losses on Net Investment Hedges			Gains and Losses on Marketable Securities			Defined Pension Plan Items			Foreign Currency Translation Adjustment			Totals
(In millions)	Foreign Currency Forward Contracts	Interest Rate Swaps	Total
Balance at December 31, 2021, net of tax			$	9.2		$	16.7		$	—		$	32.2		$	(1,802.4)		$	(1,744.3)
Other comprehensive earnings (loss) before reclassifications, before tax			57.9			585.7			(2.7)			(2.3)			(1,619.1)			(980.5)
Amounts reclassified from accumulated other comprehensive earnings (loss), before tax:
Gain on foreign exchange forward contracts classified as cash flow hedges, included in net sales	(42.3)		(42.3)															(42.3)
Loss on interest rate swaps classified as cash flow hedges, included in interest expense		2.2	2.2															2.2
Amortization of prior service costs included in SG&A												0.1						0.1
Amortization of actuarial loss included in SG&A												0.1						0.1
Net other comprehensive earnings (loss), before tax			17.8			585.7			(2.7)			(2.1)			(1,619.1)			(1,020.4)
Income tax provision (benefit)			4.3			130.8			(0.6)			—			—			134.5

Balance at June 30, 2022, net of tax			$	22.7		$	471.6		$	(2.1)		$	30.1		$	(3,421.5)		$	(2,899.2)

**14.**Segment Information

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, complex generics and generic 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.

The Company’s chief operating decision maker is the Chief Executive Officer, who evaluates the performance of its segments based on total revenues and segment profitability.

Certain costs are not included in the measurement of segment profitability, such as costs, if any, associated with the following:

◦Intangible asset amortization expense and impairments of goodwill and long-lived assets;

◦R&D and acquired IPR&D expense;

◦Net charges or net gains for litigation settlements and other contingencies;

◦Certain costs related to transactions and events such as (i) purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory and property, plant and equipment; (ii) acquisition-related costs, where we incur costs for executing the transaction, integrating the acquired operations and restructuring the combined company; and (iii) other significant items, which are substantive and/or unusual, and in

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

some cases recurring, items (such as restructuring) that are evaluated on an individual basis by management and that either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such special items can include, but are not limited to, non-acquisition-related restructuring costs, as well as costs incurred for asset impairments and disposals of assets or businesses, including costs related to our planned divestitures and the Biocon Biologics Transaction, and, as applicable, any associated transition activities.

◦Corporate and other unallocated costs associated with platform functions (such as digital, facilities, legal, finance, human resources, insurance, public affairs and procurement), patient advocacy activities and certain compensation and other corporate costs (such as interest income and expense, and gains and losses on investments, as well as overhead expenses associated with our manufacturing, which include manufacturing variances associated with production) and operations that are not directly assessed to an operating segment as business unit (segment) management does not manage these costs.

The Company does not report depreciation expense, total assets and capital expenditures by segment, as such information is not used by the chief operating decision maker.

The accounting policies of the segments are the same as those described in Note 2 Summary of Significant Accounting Policies included in the 2022 Form 10-K.

Presented in the table below is segment information for the periods identified and a reconciliation of segment information to total consolidated information.


	Net Sales				Segment Profitability
	Three Months Ended June 30,				Three Months Ended June 30,

(In millions)	2023		2022		2023		2022
Reportable Segments:
Developed Markets	$	2,353.8	$	2,479.1	$	1,059.7	$	1,255.3
Greater China	532.1		548.3		349.7		392.8
JANZ	375.5		427.1		131.6		158.1
Emerging Markets	648.1		650.9		276.9		301.0
Total reportable segments	$	3,909.5	$	4,105.4	$	1,817.9	$	2,107.2

Reconciling items:
Intangible asset amortization expense					(591.2)		(634.1)

Globally managed research and development costs					(208.3)		(162.6)
Acquired IPR&D					(10.2)		—
Litigation settlements & other contingencies					11.0		(10.9)
Transaction related and other special items					(234.6)		(227.1)
Corporate and other unallocated					(415.4)		(523.8)
Earnings from operations					$	369.2	$	548.7

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued


	Net Sales				Segment Profitability
	Six months ended June 30,				Six months ended June 30,

(In millions)	2023		2022		2023		2022
Reportable Segments:
Developed Markets	$	4,524.2	$	4,955.2	$	1,998.4	$	2,466.8
Greater China	1,096.7		1,121.4		744.0		810.5
JANZ	717.7		850.9		262.1		332.4
Emerging Markets	1,290.0		1,356.1		589.9		646.3
Total reportable segments	$	7,628.6	$	8,283.6	$	3,594.4	$	4,256.0

Reconciling items:
Intangible asset amortization expense					(1,194.5)		(1,282.2)
Intangible asset disposal & impairment charges					(32.0)		—
Globally managed research and development costs					(391.2)		(304.9)
Acquired IPR&D					(10.2)		—
Litigation settlements & other contingencies					10.4		(17.1)
Transaction related and other special items					(413.1)		(412.7)
Corporate and other unallocated					(794.8)		(983.0)
Earnings from operations					$	769.0	$	1,256.1

**15.**Restructuring

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. As part of the restructuring, the Company is optimizing its commercial capabilities and enabling functions, and closing, downsizing or divesting certain 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. The remaining actions under the 2020 restructuring program are expected to be substantially completed in 2023.

For the committed restructuring actions, the Company expects to incur total pre-tax charges of up to approximately $1.4 billion. Such charges are expected to include up to approximately $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 up to approximately $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 other plant disposal costs.

Charges for restructuring and ongoing cost reduction initiatives are recorded in the period the Company commits to a restructuring or cost reduction plan, or executes specific actions contemplated by the plan and all criteria for liability recognition have been met.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

The following table summarizes the restructuring charges and the reserve activity for the 2020 restructuring program from December 31, 2022 to June 30, 2023:


(In millions)	Employee Related Costs		Other Exit Costs		Total
Balance at December 31, 2022:	$	155.6	$	1.9	$	157.5
Charges (1)	2.8		6.9		9.7

Cash payment	(24.5)		(3.1)		(27.6)
Utilization	—		(3.8)		(3.8)
Foreign currency translation	0.3		—		0.3
Balance at March 31, 2023:	$	134.2	$	1.9	$	136.1
Charges (1)	1.4		72.6		74.0

Cash payment	(22.5)		(1.6)		(24.1)
Utilization (2)	(4.4)		(72.9)		(77.3)
Foreign currency translation	—		—		—
Balance at June 30, 2023:	$	108.7	$	—	$	108.7

(1) For the three months ended June 30, 2023, total restructuring charges in Developed Markets, Emerging Markets, JANZ, and Corporate/Other were approximately $41.7 million, $2.0 million, $30.0 million, and $0.3 million, respectively.

For the six months ended June 30, 2023, total restructuring charges in Developed Markets, Emerging Markets, Greater China, JANZ, and Corporate/Other were approximately $49.4 million, $3.3 million, $(0.6) million, $31.3 million, and $0.3 million, respectively.

(2) For the three and six months ended June 30, 2023, other exit costs includes expense of $71.6 million relating to plant divestitures.

At June 30, 2023 and December 31, 2022, accrued liabilities for restructuring and other cost reduction programs were primarily included in other current liabilities and other long-term obligations in the condensed consolidated balance sheets.

**16.**Licensing and Other Partner Agreements

We periodically enter into licensing and other partner agreements with other pharmaceutical companies for the development, manufacture, marketing and/or sale of pharmaceutical products. Our significant licensing and other partner agreements are primarily focused on the development, manufacturing, supply and commercialization of multiple complex products. Under these agreements, we have future potential milestone payments and co-development expenses payable to third parties as part of our licensing, development and co-development programs. Payments under these agreements generally become due and are payable upon the satisfaction or achievement of certain developmental, regulatory or commercial milestones or as development expenses are incurred on defined projects. Milestone payment obligations are uncertain, including the prediction of timing and the occurrence of events triggering a future obligation and are not reflected as liabilities in the condensed consolidated balance sheets, except for obligations reflected as acquisition related contingent consideration. Refer to Note 11 Financial Instruments and Risk Management for further discussion of contingent consideration.

Our potential maximum development milestones not accrued for at June 30, 2023 totaled approximately $416 million*.* These agreements may also include potential sales-based milestones and call for us to pay a percentage of amounts earned from the sale of the product as a royalty or a profit share. The amounts disclosed do not include sales-based milestones or royalty or profit share obligations on future sales of product as the timing and amount of future sales levels and costs to produce products subject to these obligations is not reasonably estimable. These sales-based milestones or royalty or profit share obligations may be significant depending upon the level of commercial sales for each product.

There have been no significant changes to our licensing and other partner agreements as disclosed in our 2022 Form 10-K.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**17.**Income Taxes

Legislative Updates

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) into law, which includes a new corporate alternative minimum tax (“CAMT”) and an excise tax of 1% on the fair market value of net stock repurchases. Both provisions are effective for years after December 31, 2022. The Company reflected the applicable estimated excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability in Other current liabilities on our condensed consolidated balance sheet as of June 30, 2023. The share repurchase and authorization amounts disclosed in this Form 10-Q exclude the excise tax. The Company does not anticipate being subject to the 15% CAMT tax in 2023 based on enacted law and regulatory guidance; however, our CAMT status for 2023 could change in the future, depending on new regulations or regulatory guidance issued by the U.S. Department of the Treasury.

Tax Examinations

The Company is subject to income taxes and tax audits in many jurisdictions. A certain degree of estimation is thus required in recording the assets and liabilities related to income taxes. Tax audits and examinations can involve complex issues, interpretations, and judgments and the resolution of matters that may span multiple years, particularly if subject to litigation or negotiation.

Although the Company believes that adequate provisions have been made for these uncertain tax positions, the Company’s assessment of uncertain tax positions, including those arising from legal entity restructuring transactions in connection with the Combination, is based on estimates and assumptions that the Company believes are reasonable but the estimates for unrecognized tax benefits and potential tax benefits may not be representative of actual outcomes, and variations from such estimates could materially affect the Company’s financial condition, results of operations or cash flows in the period of resolution, settlement or when the statutes of limitations expire.

The Company is subject to ongoing IRS examinations. The years 2015 through 2019 are open years under examination. The years 2012, 2013 and 2014 have one matter open, and a Tax Court petition was filed regarding the matter and a trial was held in December 2018 and is discussed further below.

Several international audits are currently in progress. In some cases, the tax auditors have proposed adjustments or issued assessments to our tax positions, including with respect to intercompany transactions, and we are in ongoing discussions with some of the auditors regarding the validity of their tax positions.

In instances where assessments have been issued, we disagree with these assessments and believe they are without merit and incorrect as a matter of law. As a result, we anticipate that certain of these matters may become the subject of litigation before tax courts where we intend to vigorously defend our position.

In Australia, the tax authorities have issued notices of assessments to the Company for the years ended December 2009 to December 2020, subject to additional interest and penalties, concerning our tax position with respect to certain intercompany transactions. The tax authorities denied our objections to the assessments for the years ended December 2009 to December 2020 and we have commenced litigation in the Australian Federal Court challenging those decisions. A trial is scheduled for October 2023. The Company made a partial payment of $56.0 million in 2021 and $5.2 million in 2022 in order to stay potential interest and penalties resulting from this litigation.

In France, the tax authorities have issued notices of assessments to the Company for the years ended December 2013 to December 2015 concerning our tax position with respect to whether income earned by a Company entity not domiciled in France should be subject to French tax. We have commenced litigation before the French tax courts where the tax authorities will seek unpaid taxes, penalties, and interest.

In India, the tax authorities have issued notices of assessments to the Company seeking unpaid taxes and interest for the financial years covering 2013 to 2018 concerning our tax position with respect to certain corporate tax deductions and certain intercompany transactions. Some of these issues were resolved through the Company entering into an agreement with the tax authorities in March 2023 in respect of the pricing of its international transactions. The Company recorded tax expense of approximately $0.7 million and $22.3 million during the three months and six months ended June 30, 2023, respectively, due to the terms of this agreement. The remaining issues are in the audit phase or are being challenged in the Indian tax courts.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

The Company has recorded a net reserve for uncertain tax positions of $281.3 million and $298.1 million, including interest and penalties, in connection with its international audits at June 30, 2023 and December 31, 2022, respectively. In connection with our international tax audits, it is possible that we will incur material losses above the amounts reserved.

The Company’s major U.S. state taxing jurisdictions remain open from fiscal year 2013 through 2021, with several state audits currently in progress. The Company’s major international taxing jurisdictions remain open from 2012 through 2021.

Tax Court Proceedings

The Company's U.S. federal income tax returns for 2012 through 2014 had been subject to proceedings in U.S. Tax Court involving a dispute with the IRS regarding whether certain costs related to ANDAs were eligible to be expensed and deducted immediately or required to be amortized over longer periods. A trial was held in U.S. Tax Court in December 2018 and on April 27, 2021, the Court affirmed Mylan’s position and held that patent litigation expenses related to ANDAs are immediately deductible. The IRS’ appeal was denied by the U.S. Court of Appeals for the Third Circuit.

Accounting for Uncertainty in Income Taxes

The impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihood of being sustained.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

**18.**Litigation

The Company is involved in various disputes, governmental and/or regulatory inquiries, investigations and proceedings, tax proceedings and litigation matters, both in the U.S. and abroad, that arise from time to time, some of which could result in losses, including damages, fines and/or civil penalties, and/or criminal charges against the Company. These matters are often complex and have outcomes that are difficult to predict.

In addition, in connection with the Combination, the Company has generally assumed liability for, and control of, pending and threatened legal matters relating to the Upjohn Business – including certain matters initiated against Pfizer described below – and has agreed to indemnify Pfizer for liabilities arising out of such assumed legal matters. Pfizer, however, has agreed to retain various matters – including certain specified competition law matters – to the extent they arise from conduct during the pre-Distribution period and has agreed to indemnify the Company for liabilities arising out of such matters.

While the Company believes that it has meritorious defenses with respect to the claims asserted against it and the assumed legal matters referenced above, and intends to vigorously defend its position, the process of resolving these matters is inherently uncertain and may develop over a long period of time, and so it is not possible to predict the ultimate resolution of any such matter. It is possible that an unfavorable resolution of any of the ongoing matters could have a material effect on the Company’s business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price.

Some of these governmental inquiries, investigations, proceedings and litigation matters with which the Company is involved are described below, and unless otherwise disclosed, the Company is unable to predict the outcome of the matter or to provide an estimate of the range of reasonably possible material losses. The Company records accruals for loss contingencies to the extent we conclude it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company is also involved in other pending proceedings for which, in the opinion of the Company based upon facts and circumstances known at the time, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s business, financial position, results of operations, cash flows, ability to pay dividends and/or stock price. If and when any reasonably possible losses associated with the resolution of such other pending proceedings, in the opinion of the Company, become material, the Company will disclose such matters.

Legal costs are recorded as incurred and are classified in SG&A in the Company’s condensed consolidated statements of operations.

EpiPen® Auto-Injector Litigation

On February 14, 2020, the Company, together with other non-Viatris affiliated companies, were named as defendants in a putative direct purchaser class action filed in the U.S. District Court for the District of Kansas relating to the pricing and/or marketing of the EpiPen® Auto-Injector. On September 21, 2021, after Plaintiffs’ then operative complaint was dismissed with an option to file a limited amended complaint, Plaintiffs filed an amended complaint asserting federal antitrust claims which are based on allegations concerning a patent settlement between Pfizer and Teva and other alleged actions regarding the launch of Teva’s generic epinephrine auto-injector. Plaintiffs’ seek monetary damages, declaratory relief, attorneys’ fees and costs.

Beginning in March 2020, the Company, together with other non-Viatris affiliated companies, were named as defendants in putative direct purchaser class actions filed in the U.S. District Court for the District of Minnesota relating to contracts with certain pharmacy benefit managers concerning EpiPen® Auto-Injector. The plaintiffs claim that the alleged conduct resulted in the exclusion or restriction of competing products and the elimination of pricing constraints in violation of RICO and federal antitrust law. These actions have been consolidated. Plaintiffs’ seek monetary damages, attorneys’ fees and costs.

On April 24, 2017, Sanofi Aventis U.S., LLC (“Sanofi”) filed a lawsuit against the Company in the U.S. District Court for the District of New Jersey. This lawsuit was transferred into a MDL in the U.S. District Court for the District of Kansas and alleged exclusive dealing and anti-competitive marketing practices in violation of the antitrust laws in connection with the sale and marketing of the EpiPen® Auto-Injector. Sanofi sought monetary damages, declaratory relief, attorneys’ fees and costs. The Court granted the Company’s motion for summary judgment and dismissed Sanofi’s claims. Sanofi’s appeal was denied. Sanofi’s petition seeking review by the U.S. Supreme Court was also denied and concludes this matter.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

The Company has a total accrual of approximately $5.5 million related to these matters at June 30, 2023, which is included in other current liabilities in the condensed consolidated balance sheets. Although it is reasonably possible that the Company may incur additional losses from these matters, any amount cannot be reasonably estimated at this time. In addition, the Company expects to incur additional legal and other professional service expenses associated with such matters in future periods and will recognize these expenses as services are received. The Company believes that the ultimate amount paid for these services and claims could have a material effect on the Company's business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price in future periods.

Drug Pricing Matters

Department of Justice

On December 3, 2015, the Company received a subpoena from the Antitrust Division of the DOJ seeking information relating to the marketing, pricing, and sale of certain of our generic products and any communications with competitors about such products. On September 8, 2016, the Company, as well as certain employees and a member of senior management, received subpoenas from the DOJ seeking similar information. Related search warrants also were executed.

On May 10, 2018, the Company received a civil investigative demand from the Civil Division of the DOJ seeking information relating to the pricing and sale of its generic drug products.

We have fully cooperated with these investigations, which we believe are related to a broader industry-wide investigation of the generic pharmaceutical industry. We have not had contact from DOJ concerning the above-described subpoenas or civil investigative demand in several years.

Civil Litigation

Beginning in 2016, the Company, along with other manufacturers, has been named as a defendant in lawsuits filed in the United States and Canada generally alleging anticompetitive conduct with respect to generic drugs. The lawsuits have been filed by plaintiffs, including putative classes of direct purchasers, indirect purchasers, and indirect resellers, as well as individual direct and indirect purchasers and certain cities and counties. The lawsuits allege harm under federal laws and the United States lawsuits also allege harm under state laws, including antitrust laws, state consumer protection laws and unjust enrichment claims. Some of the United States lawsuits also name as defendants the Company’s President, including allegations against him with respect to a single drug product, and one of the Company’s sales employees, including allegations against him with respect to certain generic drugs. The vast majority of the lawsuits have been consolidated in an MDL proceeding in the Eastern District of Pennsylvania (“EDPA”). Plaintiffs generally seek monetary damages, restitution, declaratory and injunctive relief, attorneys’ fees and costs. The EDPA Court has ordered certain plaintiffs’ complaints regarding two single-drug product cases to proceed as bellwethers. The Company is named in those plaintiffs’ complaints that regard one of the two individual drug products.

Attorneys General Litigation

On December 21, 2015, the Company received a subpoena and interrogatories from the Connecticut Office of the Attorney General seeking information relating to the marketing, pricing and sale of certain of the Company’s generic products and communications with competitors about such products. On December 14, 2016, attorneys general of certain states filed a complaint in the United States District Court for the District of Connecticut against several generic pharmaceutical drug manufacturers, including the Company, alleging anticompetitive conduct with respect to, among other things, a single drug product. The complaint has subsequently been amended, including on June 18, 2018, to add attorneys general alleging violations of federal and state antitrust laws, as well as violations of various states’ consumer protection laws. This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA. The operative complaint includes attorneys general of forty-six states, the District of Columbia and the Commonwealth of Puerto Rico. The Company is alleged to have engaged in anticompetitive conduct with respect to four generic drug products. The amended complaint also includes claims asserted by attorneys general of thirty-six states and the Commonwealth of Puerto Rico against certain individuals, including the Company’s President, with respect to a single drug product. The amended complaint seeks declaratory and injunctive relief, disgorgement, attorneys’ fees and costs, and certain states seek monetary damages, civil penalties, restitution, and other equitable monetary relief. The states’ claim for disgorgement and restitution under federal law in this case has been dismissed.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

On May 10, 2019, certain attorneys general filed a new complaint in the United States District Court for the District of Connecticut against various drug manufacturers and individuals, including the Company and one of its sales employees, alleging anticompetitive conduct with respect to additional generic drugs. On November 1, 2019, the complaint was amended, adding additional states as plaintiffs. The operative complaint is brought by attorneys general of forty-seven states, certain territories and the District of Columbia. The amended complaint also includes claims asserted by attorneys general of forty-two states and certain territories against several individuals, including a Company sales employee. The amended complaint seeks declaratory and injunctive relief, disgorgement, attorneys’ fees and costs, and certain states seek monetary damages, civil penalties, restitution, and other equitable monetary relief. This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA.

On June 10, 2020, certain attorneys general filed a new complaint in the United States District Court for the District of Connecticut against drug manufacturers, including the Company, and individual defendants (none from the Company), alleging anticompetitive conduct with respect to additional generic drugs. On September 9, 2021, the complaint was amended, adding an additional state as a plaintiff. The operative complaint is brought by attorneys general of forty-six states, certain territories and the District of Columbia. The amended complaint seeks declaratory and injunctive relief, disgorgement, attorneys’ fees and costs, and certain states seek monetary damages, civil penalties, restitution, and other equitable monetary relief. The states’ claim for disgorgement and restitution under federal law in this case has been dismissed. This lawsuit has been transferred to the aforementioned MDL proceeding in the EDPA and has been ordered to proceed as a bellwether.

Securities Related Litigation

Purported class action complaints were filed in October 2016 against Mylan N.V. and Mylan Inc. (collectively “Mylan”), certain of Mylan’s former directors and officers, and certain of the Company’s current directors and officers (collectively, for purposes of this paragraph, the “defendants”) in the United States District Court for the Southern District of New York (“SDNY”) on behalf of certain purchasers of securities of Mylan on the NASDAQ. The complaints alleged that defendants made false or misleading statements and omissions of purportedly material fact, in violation of federal securities laws, in connection with disclosures relating to the classification of their EpiPen® Auto-Injector as a non-innovator drug for purposes of the Medicaid Drug Rebate Program. On March 20, 2017, a consolidated amended complaint was filed alleging substantially similar claims, but adding allegations that defendants made false or misleading statements and omissions of purportedly material fact in connection with allegedly anticompetitive conduct with respect to EpiPen® Auto-Injector and certain generic drugs.

The operative complaint is the third amended consolidated complaint, which was filed on June 17, 2019, and contains the allegations as described above against Mylan, certain of Mylan’s former directors and officers, and certain of the Company’s current directors, officers, and employees (collectively, for purposes of this paragraph, the “defendants”). A class has been certified covering all persons or entities that purchased Mylan common stock between February 21, 2012 and May 24, 2019 excluding defendants, certain of the Company’s current directors and officers, former directors and officers of Mylan, members of their immediate families and their legal representatives, heirs, successors or assigns, and any entity in which defendants have or had a controlling interest. Plaintiffs seek damages and costs and expenses, including attorneys’ fees and expert costs. On March 30, 2023, the Court dismissed all of Plaintiffs’ claims by granting Defendants’ motion for summary judgment and denying Plaintiffs’ cross-motion for partial summary judgment. Plaintiffs have filed an appeal to the U.S. Court of Appeals for the Second Circuit.

On April 30, 2017, a similar lawsuit was filed in the Tel Aviv District Court (Economic Division) in Israel, which has been stayed pending a decision in the SDNY class action litigation.

On February 14, 2020, the Abu Dhabi Investment Authority filed a complaint against Mylan in the SDNY asserting allegations pertaining to EpiPen® Auto-Injector and certain generic drugs under the federal securities laws that overlap with those asserted in the third amended complaint identified above. The Abu Dhabi Investment Authority’s complaint seeks monetary damages as well as the plaintiff’s fees and costs.

On June 26, 2020, a putative class action complaint was filed by the Public Employees Retirement System of Mississippi, which was subsequently amended on November 13, 2020, against Mylan N.V., certain of Mylan N.V.’s former directors and officers, and an officer and director of the Company (collectively for the purposes of this paragraph, the “defendants”) in the U.S. District Court for the Western District of Pennsylvania on behalf of certain purchasers of securities of Mylan N.V. The amended complaint alleges that defendants made false or misleading statements and omissions of purportedly material fact, in violation of federal securities laws, in connection with disclosures relating to the Nashik and Morgantown

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

manufacturing plants and inspections at the plants by the FDA. Plaintiff seeks certification of a class of purchasers of Mylan N.V. securities between February 16, 2016 and May 7, 2019. On May 18, 2023, the Court dismissed 45 of the 46 challenged statements. The complaint seeks monetary damages, as well as the plaintiff’s fees and costs.

On February 15, 2021, a complaint was filed by Skandia Mutual Life Ins. Co., Lansforsakringar AB, KBC Asset Management N.V., and GIC Private Limited, against the Company, certain of Mylan N.V.’s former directors and officers, a current director and officer of the Company, and current employees of the Company. The Complaint asserts claims which are based on allegations that are similar to those in the SDNY and the Western District of Pennsylvania complaints identified above. Plaintiffs seek compensatory damages, costs and expenses and attorneys’ fees.

On October 28, 2021, the Company and certain of its then officers and directors were named as defendants in a putative class action lawsuit filed in the Court of Common Pleas of Allegheny County, Pennsylvania on behalf of former Mylan shareholders who received Company common stock in connection with the Combination. A non-Viatris affiliated company and persons were also named as defendants. The complaint alleges violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 for purportedly failing to disclose or misrepresenting material information in the registration statement and related prospectus issued in connection with the Combination. On January 3, 2023, an amended complaint was filed naming the same defendants and alleging the same violations as the original complaint. Plaintiffs seek monetary damages, reasonable costs and expenses, and certain other equitable and injunctive relief.

Beginning in May 2023, putative class action complaints were filed against the Company and certain of the Company’s current and former officers, directors, or employees (collectively, for the purposes of this paragraph, the “defendants”) in the U.S. District Court for the Western District of Pennsylvania on behalf of certain purchasers of securities of the Company. The complaints allege that defendants made false or misleading statements and omissions of material fact, in violation of federal securities laws, in connection with disclosures relating to the Company’s projected financial performance and biosimilars business. Plaintiffs seek certification of a class of purchasers of Company securities between March 1, 2021 and February 25, 2022. Plaintiffs seek monetary damages, reasonable costs and expenses, and certain other equitable and injunctive relief.

Opioids

The Company, along with other manufacturers, distributors, pharmacies, pharmacy benefit managers, and individual healthcare providers is a defendant in more than 1,000 cases in the United States and Canada filed by various plaintiffs, including counties, cities and other local governmental entities, asserting civil claims related to sales, marketing and/or distribution practices with respect to prescription opioid products. In addition, lawsuits have been filed as putative class actions including on behalf of children with Neonatal Abstinence Syndrome due to alleged exposure to opioids.

The lawsuits generally seek equitable relief and monetary damages (including punitive and/or exemplary damages) based on a variety of legal theories, including various statutory and/or common law claims, such as negligence, public nuisance and unjust enrichment. The vast majority of these lawsuits have been consolidated in an MDL in the U.S. District Court for the Northern District Court of Ohio.

On January 13, 2023, the Company received a civil subpoena from the Attorney General of the State of New York seeking information relating to opioids manufactured, marketed, or sold by the Company and related subject matter. The Company is fully cooperating with this subpoena request.

The Company has accrued $5.0 million in connection with the possible resolution of certain of these matters at June 30, 2023, which is included in other current liabilities in the condensed consolidated balance sheets. Although it is reasonably possible that the Company may incur additional losses from these matters, any amount cannot be reasonably estimated at this time. In addition, the Company expects to incur additional legal and other professional service expenses associated with such matters in future periods and will recognize these expenses as services are received. The Company believes that the ultimate amount paid for these services and claims could have a material effect on the Company's business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price in future periods.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Meda Sweden Commercial Dispute

On August 30, 2021, Ocular AS and other related entities (“Claimants”) initiated an arbitration in Sweden against Meda OTC AB and Meda AB (collectively, “Meda” or the “Company”) alleging breach of a 2013 sale and purchase agreement between Claimants and Meda concerning commercialization of a dental hygiene product. Claimants sought approximately $155 million in purported damages, plus interest and costs. In May 2023, the arbitration panel ruled in Claimants’ favor and the Company resolved the matter for approximately $21.8 million, which was accrued at June 30, 2023 and paid in July 2023.

Citalopram

In 2013, the European Commission issued a decision finding that Lundbeck and several generic companies, including Generics [U.K.] Limited (“GUK” or the “Company”), had violated EU competition rules relating to various settlement agreements entered into in 2002 for citalopram. After various appeals, the European Commission’s decision was upheld in March 2021. On March 28, 2023, bodies of the national health authorities in England & Wales served a claim in the U.K. Competition Appeals Tribunal against parties to the citalopram investigation, including GUK, seeking monetary damages, plus interest, purportedly arising from the settlement agreements. The Company, beginning in approximately 2018, has received notices from other health service authorities and insurers asserting an intention to file similar claims. Pursuant to an indemnification agreement, Merck KGaA and GUK have agreed to equally share any damages claimed against Merck KGaA and/or GUK alleged to have been caused by the conduct which is the subject of the European Commission decision.

The Company has accrued approximately €12.1 million as of June 30, 2023 related to this matter. It is reasonably possible that we will incur additional losses above the amount accrued but we cannot estimate a range of such reasonably possible losses at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued.

Product Liability

Like other pharmaceutical companies, the Company is involved in a number of product liability lawsuits related to alleged personal injuries arising out of certain products manufactured/or distributed by the Company, including but not limited to those discussed below. Plaintiffs in these cases generally seek damages and other relief on various grounds for alleged personal injury and economic loss.

The Company has accrued approximately $65.4 million as of June 30, 2023 for its product liability matters. It is reasonably possible that we will incur additional losses and fees above the amount accrued but we cannot estimate a range of such reasonably possible losses or legal fees related to these claims at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued.

Nitrosamines

The Company, along with numerous other manufacturers, retailers, and others, are parties to litigation relating to alleged trace amounts of nitrosamine impurities in certain products, including valsartan and ranitidine. The vast majority of these lawsuits naming the Company in the United States are pending in two MDLs, namely an MDL pending in the United States District Court for the District of New Jersey concerning valsartan and an MDL pending in the United States District Court for the Southern District of Florida concerning ranitidine. The lawsuits against the Company in the MDLs include putative and certified classes seeking the refund of the purchase price and other economic and punitive damages allegedly sustained by consumers and end payors as well as individuals seeking compensatory and punitive damages for personal injuries allegedly caused by ingestion of the medications. Similar lawsuits pertaining to valsartan have been filed in other countries. Third party payor, consumer and medical monitoring classes were certified in the valsartan MDL and a Rule 23(f) petition to appeal the certification decision was denied. The Company has also received claims and inquiries related to these products, as well as requests to indemnify purchasers of the Company’s API and/ or finished dose forms of these products. The original master complaints concerning ranitidine were dismissed on December 31, 2020. The end-payor plaintiff immediately appealed to the U.S. Court of Appeals for the Eleventh Circuit, which affirmed the dismissal. The personal injury and consumer putative class plaintiffs filed amended master complaints. The Company was not named as a defendant in the amended master complaints, though it was still named in certain short form complaints filed by personal injury plaintiffs. The trial court has dismissed all remaining claims against the generic defendants. Certain of the personal injury plaintiffs appealed this dismissal, which remains pending.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Lipitor

A number of individual and multi-plaintiff lawsuits have been filed against Pfizer in various federal and state courts alleging that the plaintiffs developed type 2 diabetes purportedly as a result of the ingestion of Lipitor. Plaintiffs seek compensatory and punitive damages. In February 2014, the federal actions were transferred for consolidated pre-trial proceedings to an MDL in the U.S. District Court for the District of South Carolina. Since 2016, certain cases in the MDL were remanded to certain state courts. In 2017, the District Court granted Pfizer’s motion for summary judgment, dismissing all of the cases pending in the MDL. In June 2018, this dismissal was affirmed by the U.S. Court of Appeals for the Fourth Circuit. The state court proceedings remain pending in Missouri and New York. Prior state court proceedings in California have now been terminated after the California Court previously granted motions (i) to exclude the opinions of plaintiffs’ only general causation expert in connection with his opinions involving the three lowest doses of Lipitor (10, 20 and 40 mg); (ii) for summary judgment in connection with the 10, 20, and 40 mg plaintiffs; and (iii) seeking the dismissal of the remaining cases involving the highest dose of Lipitor (80 mg).

Intellectual Property

The Company is involved in a number of patent litigation lawsuits involving the validity and/or infringement of patents held by branded pharmaceutical manufacturers including but not limited to the matters described below. The Company uses its business judgment to decide to market and sell certain products, in each case based on its belief that the applicable patents are invalid and/or that its products do not infringe, notwithstanding the fact that allegations of patent infringement(s) or other potential third party rights have not been finally resolved by the courts. The risk involved in doing so can be substantial because the remedies available to the owner of a patent for infringement may include, a reasonable royalty on sales or damages measured by the profits lost by the patent owner. If there is a finding of willful infringement, damages may be increased up to three times. Moreover, because of the discount pricing typically involved with bioequivalent products, patented branded products generally realize a substantially higher profit margin than generic and biosimilar products. The Company also faces challenges to its patents, including suits in various jurisdictions pursuant to which generic drug manufacturers, payers, governments, or other parties are seeking damages for allegedly causing delay of generic entry. An adverse decision in any of these matters could have an adverse effect that is material to our business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price.

The Company has accrued approximately $60.7 million as of June 30, 2023 for its intellectual property matters. It is reasonably possible that we will incur additional losses and fees above the amount accrued but we cannot estimate a range of such reasonably possible losses or legal fees related to these claims at this time. There are no assurances, however, that settlements reached and/or adverse judgments received, if any, will not exceed amounts accrued.

Lyrica - United Kingdom

Beginning in 2014, Pfizer was involved in patent litigation in the English courts concerning the validity of its Lyrica pain use patent. In 2015, the High Court of Justice in London ordered that the NHS England issue guidance for prescribers and pharmacists directing the prescription and dispensing of Lyrica by brand when pregabalin was prescribed for the treatment of neuropathic pain and entered a preliminary injunction against certain Sandoz group companies preventing the sale of Sandoz’s full label pregabalin product. Pfizer undertook to compensate certain generic companies and NHS entities for losses caused by these orders, which remained in effect until patent expiration in July 2017. In November 2018, the U.K. Supreme Court ruled that all the relevant claims directed to neuropathic pain were invalid.

Dr. Reddy’s Laboratories filed a claim for monetary damages, interest, and costs in May 2020, followed by the Scottish Ministers and fourteen Scottish Health Boards (together, NHS Scotland) in July 2020. In September 2020, Teva, Sandoz, Ranbaxy, Actavis, and the Secretary of State for Health and Social Care, together with 32 other NHS entities (together, NHS England, Wales, and Northern Ireland) filed their claims. All of the claims except for those filed by Dr. Reddy’s Laboratories have been resolved. A trial on the remaining claims has been set for November 2023.

Table of Contents

VIATRIS INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued

Yupelri

Beginning in January 2023, certain generic companies notified us that they had filed ANDAs with the FDA seeking approval to market generic versions of Yupelri® with associated Paragraph IV certifications. The companies assert the invalidity and/or non-infringement of polymorph patents expiring in 2030 and 2031, and a method of use patent expiring in 2039. The companies have not filed Paragraph IV certifications to our compound patents, which currently expire in December 2025, with one compound patent subject to a patent term extension to October 2028. In February 2023, we brought patent infringement actions against the generic filers in federal district courts, including the U.S. District Court for the District of New Jersey, the U.S. District Court for the District of Delaware, and the U.S. District Court for the Middle District of North Carolina, asserting infringement of the patents by the generic companies. The actions filed in Delaware and North Carolina have been dismissed and the actions will proceed in New Jersey.

Tyrvaya

In June 2023, a generic company notified Oyster Point that it had filed an ANDA with the FDA seeking approval to market a generic version of Tyrvaya® with associated Paragraph IV certifications. The generic company asserts the invalidity and/or non-infringement of six Orange Book listed patents that all have expiration dates in October 2035. In July 2023, Oyster Point brought a patent infringement action against the generic filer in the U.S. District Court of the District of New Jersey asserting infringement by the generic company.

Other Litigation

The Company is involved in various other legal proceedings including commercial, contractual, employment, or other similar matters that are considered normal to its business. The Company has approximately $9 million accrued related to these various other legal proceedings at June 30, 2023.

Table of Contents

Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS