Viatris Inc (NASDAQ: VTRS)

Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic CIK: 0001792044
Market Cap 14.87 Bn
P/B 0.98
P/E -4.03
P/S 1.05
ROIC (Qtr) -144.08
Div Yield % 4.82
Rev 1y % (Qtr) 0.23
Total Debt (Qtr) 14.44 Bn
Debt/Equity (Qtr) 0.95

About

Viatris Inc., a global healthcare company with the ticker symbol VTRS, operates in the pharmaceutical industry, spanning across various countries and continents. The company's main business activities revolve around providing access to high-quality medicines, regardless of geographical or circumstantial barriers. Viatris boasts a diverse portfolio of medicines, comprising globally recognized iconic and key brands, generics, and over-the-counter (OTC) products. The company's revenue is primarily generated through its extensive portfolio of medicines,...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 1.98B provides strong 12.35x coverage of stock compensation 160.60M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.67B exceeds capital expenditure of 308.50M by 5.43x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 15.47B provides 5.98x coverage of working capital 2.59B, indicating strong operational backing.
  • Tangible assets of 15.47B provide robust 4.27x coverage of other current liabilities 3.62B, indicating strong asset backing.
  • Strong R&D investment of 897.70M at 2.91x of capex 308.50M shows balanced investment in innovation and infrastructure.

Bear case

  • Operating cash flow of 1.98B barely covers its investment activities of (385.20M), with a coverage ratio of -5.15, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 975.30M against inventory of 4.11B, the 0.24 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Investment activities of (385.20M) provide weak support for R&D spending of 897.70M, which is -0.43x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 1.98B provides thin coverage of dividend payments of (566.30M) with a -3.50 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 975.30M provide limited coverage of acquisition spending of (43.10M), which is -22.63x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.

Peer comparison

Companies in the Drug Manufacturers - Specialty & Generic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ZTS Zoetis Inc. 56.15 Bn 21.18 5.98 7.27 Bn
2 TAK Takeda Pharmaceutical Co Ltd 48.92 Bn 221.13 1.66 36.24 Bn
3 HLN Haleon plc 46.13 Bn 25.59 3.29 -
4 TEVA Teva Pharmaceutical Industries Ltd 35.27 Bn 49.54 2.10 17.07 Bn
5 UTHR UNITED THERAPEUTICS Corp 21.76 Bn 17.11 6.95 0.00 Bn
6 VTRS Viatris Inc 14.87 Bn -4.03 1.05 14.44 Bn
7 NBIX Neurocrine Biosciences Inc 14.08 Bn 32.91 5.25 0.43 Bn
8 ELAN Elanco Animal Health Inc 11.64 Bn 323.29 2.54 4.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.76 24.98
EV to Cash from Ops. EV/CFO 14.51 -85.40
EV to Debt EV to Debt 1.99 265.88
EV to EBIT EV/EBIT -8.52 -32.65
EV to EBITDA EV/EBITDA 225.71 -29.50
EV to Free Cash Flow [EV/FCF] EV/FCF 17.19 -32.62
EV to Market Cap EV to Market Cap 1.93 -10.98
EV to Revenue EV/Rev 2.04 -700.14
Price to Book Value [P/B] P/B 0.98 27.22
Price to Earnings [P/E] P/E -4.03 -122.96
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -6.52 0.34
Dividend Payout Ratio % Div Payout % (Qtr) -15.50 4.81
Dividend per Basic Share Div per Share (Qtr) 0.48 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 33.38 4.08
Interest Coverage Int. cover (Qtr) -7.16 -38.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 11.43 -157.22
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -48.09 44,776.25
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 2.81
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -815.87 24.45
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -94.95 18.14
EBIT Growth (1y) % EBIT 1y % (Qtr) -786.25 37.66
EBT Growth (1y) % EBT 1y % (Qtr) -304.38 108.18
EPS Growth (1y) % EPS 1y % (Qtr) -329.17 52.88
FCF Growth (1y) % FCF 1y % (Qtr) -17.94 -54.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -15.40 25.28
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.37 0.50
Cash Payout Ratio Cash Payout (Qtr) 0.25 0.02
Cash Ratio Cash Ratio (Qtr) 0.13 2.10
Current Ratio Curr Ratio (Qtr) 1.35 3.92
Debt to Equity Ratio Debt/Equity (Qtr) 0.95 -1.11
Interest Cover Ratio Int Coverage (Qtr) -7.16 -38.10
Times Interest Earned Times Interest Earned (Qtr) -7.16 -38.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -4.20 -62,432.09
EBIT Margin % EBIT Margin % (Qtr) -23.91 -63,260.88
EBT Margin % EBT Margin % (Qtr) -27.25 -66,726.96
Gross Margin % Gross Margin % (Qtr) 36.00 8,332.72
Net Profit Margin % Net Margin % (Qtr) -26.10 -66,728.37