Viatris' 2026 Q2 Earnings Call: Nashik Supply Delays and China Growth Outlook Clash with Prior Guidance

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $3.8B, representing 3.5% operational revenue growth year-over-year
• EPS: $0.69 per adjusted share
• Gross Margin: 57.5%, representing nearly 1% improvement versus the prior year

Guidance:

• Raised midpoint of 2026 financial guidance ranges across all key metrics.
• Total revenues expected to have low double-digit growth in Greater China, roughly flat in developed markets (North America declining slightly), low single-digit growth in emerging markets, and low single-digit decline in JANZ.
• Anticipated supply disruption impact of $100-$150M to second half revenues.
• Free cash flow expected to be more heavily weighted to the second half.
• Total revenues for the year expected to be weighted to the second half at approximately 51% of full-year output.

Business Commentary:

Revenue Growth and Strategic Execution:

• Viatris reported total revenues of $3.8 billion for Q2 2026, representing 3.5% operational revenue growth year-over-year.
• The growth was driven by strong performance in Greater China and North America, particularly in the cardiovascular portfolio and complex generics, reflecting effective commercial execution and strategic investments.

Earnings and Operating Leverage:

• The company delivered an adjusted EBITDA of $1.2 billion and adjusted EPS of $0.69 per share, exceeding expectations.
• These results were attributed to continued improvement in operating leverage and strong momentum across businesses, supported by cost containment measures from the enterprise-wide strategic review.

Pipeline Progress and Regulatory Approvals:

• Viatris received U.S. regulatory approval for Gwyn Lo and is preparing for the launch of fast-acting meloxicam, with positive phase III results for Nefecon in Japan.
• These developments underscore the momentum in the pipeline and are expected to contribute significantly to long-term growth.

Strategic Shifts and Divestments:

• The company agreed to sell the global rights to Durbia, indicating a strategic shift away from eye care.
• This decision is part of a broader effort to prioritize capital, talent, and resources toward opportunities with the greatest long-term growth potential.

China Market Performance:

• Greater China reported a 16% year-over-year increase in net sales, driven by favorable market fundamentals, an aging population, and demand for cardiovascular products.
• Strategic investments in selling and marketing capabilities, including e-commerce platforms, have positioned Viatris to capitalize on the strength of its brands in the region.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated, 'We’re off to an exceptional start in 2026. We delivered another strong quarter that reinforces our confidence in the strategy... These results exceeded our expectations and reflect the strong momentum across our businesses and continued improvement in operating leverage. Just as importantly, these results give us confidence to raise our outlook for the remainder of the year.' Interim CFO added, 'I’m pleased to report that we delivered another strong quarter, reflecting the durability of our global portfolio and disciplined execution of our strategy.'

Q&A:

• Question from Ash Verma (UBS): Help us understand what percentage of your revenue right now is coming from e-commerce, retail, or the government channel in China. Also, explain the guidance raise where revenue was raised by $50M but EBITDA by $100M.
  Response: E-commerce represents about 10-15% of the China business. The guidance raise reflects strong first-half performance; EBITDA growth outpaced revenue due to cost containment and savings from the strategic review, but second-half challenges from competition in high-margin North America products and China muting the EBITDA growth relative to revenue.

• Question from Umer Raffat (Evercore): At what point post-event are patients initiated on an oral antiplatelet, what's the offset time for Selatogrel, and how is timing handled for procedures like CABG?
  Response: Most patients are already on oral clopidogrel; Selatogrel is added on top. The drug's effect offsets within 24 hours, allowing initiation of an oral P2Y12 inhibitor if needed. For CABG, it can be initiated safely at any point, including within 8 hours post-Selatogrel, if deemed urgent.

• Question from Matt Dellatorre (Goldman Sachs): How is fast-acting meloxicam factored into long-term guidance, and what benefit magnitude is needed for meaningful uptake?
  Response: Fast-acting meloxicam is seen as a significant contributor to U.S. revenue between now and 2030, with potential peak sales up to $500M. The study is powered for a 20% risk reduction, but investigators would accept a benefit as low as 10-15% for commercial launch.

• Question from Glen Santangelo (Barclays): Comment on the durability of strength in China and whether fire-related disruptions are contained to 2026. Also, are you still thinking of the value-added pipeline as a 1% growth contributor?
  Response: China performance shows good durability with strong investments, though policy changes remain a variable. The Nashik facility disruptions are expected to be intermittent and contained to the second half of 2026, with remediation anticipated to be complete by year-end/beginning of next year. The value-added pipeline remains a key growth driver, with fast-acting meloxicam seen as a meaningful contributor beyond the 1% algorithm.

• Question from Ethan (J.P. Morgan): What are your latest thoughts on the M&A environment and potential impact of U.S. generic tariffs?
  Response: The M&A environment is active with many assets available; Viatris is pursuing disciplined, accretive, in-market opportunities. Regarding tariffs, the company is in a good position with eight U.S. sites and plans to manufacture higher-margin products domestically, and will work with the administration as details emerge.

• Question from Dennis Ding (Jefferies): On Cenerimod, given the high IFN1 relationship broke in phase II, what gives confidence for phase III? On Selatogrel, why was the trial upsized, and are blinded event rates tracking?
  Response: For Cenerimod, the phase II 4mg dose showed strong efficacy in IFN1-high patients (45% of the arm), and phase III has been enriched to ~70% IFN1-high patients with a steroid-sparing mandate. For Selatogrel, the trial was upsized to enroll up to 21,000 patients to ensure sufficient events; enrollment continues and event rates are tracking as planned.

• Question from Jason Gerberry (Bank of America): Should we think of low single-digit growth in China as carryover into 2027, creating tough comps? What are the lag factors for Selatogrel top-line data post-enrollment?
  Response: China growth is expected to moderate from 16-17% in 2026 but should continue, with policy impact clearer by November. For Selatogrel, while the primary endpoint is at 7 days, secondary endpoints are at 30 days, and data cleaning across 45 countries and 900 sites will lead to a first-half 2027 data release.

• Question from David Amsellem (Piper Sandler): Is background BENLYSTA allowed in the Cenerimod trial, and how long will the hormonal patch market remain a limited competition growth driver?
  Response: BENLYSTA is allowed in the Cenerimod trial but is expected in only ~5% of patients, with balance ensured by randomization. The estradiol patch market is expanding due to FDA warning removal and GLP-1 use, with Viatris in a leading manufacturing position and ramping capacity to meet strong demand.

• Question from Umer Raffat (Evercore) - Follow-up: Was the Selatogrel trial upsizing from 14,000 to 25,000 informed by powering or just continued enrollment?
  Response: The increase was to allow continued enrollment to reach the needed event count faster, leveraging the sizable study to get data sooner rather than stopping early and waiting for events to occur.

Contradiction Point 1

Timeline and Impact of Nashik Supply Disruptions

Contradiction on when supply issues will be resolved and their financial impact.

Glen Santangelo (Barclays) - Glen Santangelo (Barclays)

2026Q2: Remediation is ongoing... The company expects to move past these issues by year-end/early 2027. - [Scott Smith](CEO), [Paul Campbell](Interim CFO), [Karin Murgoff](CCO)

What is the updated contribution of the value-added medicines pipeline (like meloxicam) to growth, considering the durability of China's strength beyond 2026 and whether fire-related supply disruptions are contained to 2026? - Chris Schott (JP Morgan)

2026Q1: For ARVs, they have mitigated supply constraints by moving production, are making progress, and have baked all current risks into their updated forecast. There may be upside. - [Paul Campbell](Interim CFO)

Contradiction Point 2

Growth Contribution from Innovative Pipeline

Contradiction on the magnitude of revenue contribution from new products.

Glen Santangelo (Barclays) - Glen Santangelo (Barclays)

2026Q2: The fast-acting meloxicam is seen as a meaningful contributor... The value-added medicines pipeline... adding ~1% to the growth algorithm. - [Scott Smith](CEO), [Paul Campbell](Interim CFO), [Karin Murgoff](CCO)

What is the outlook for China's durability beyond 2026, the containment of fire-related supply disruptions to 2026, and the updated contribution of the value-added medicines pipeline (e.g., meloxicam) to growth? - Glen Santangelo (Barclays)

2026Q1: They have increased their China growth expectation from low single digits to mid-to-high single digits... - [Paul Campbell](Interim CFO)

Contradiction Point 3

Revenue and EBITDA Guidance Trajectory

Guidance raises but EBITDA growth muted by increased competition.

Ash Verma (UBS) - Ash Verma (UBS)

2026Q2: The raised 2026 guidance reflects strong first-half performance. Adjusted EBITDA growth in the first half exceeded revenue growth... However, second-half EBITDA growth is expected to be muted by increased competition in high-margin North American products and lower-margin supply disruptions (Nashik). The revenue guidance was raised but expects some impact from Nashik supply issues. - [Paul Campbell](Interim CFO), [Scott Smith](CEO)

What percentage of revenue comes from e-commerce, retail, or government channels in China, and what guidance was raised for revenue and EBITDA given headwinds in the hospital channel? - Glen Santangelo (Barclays)

20260226-2025 Q4: We are confident in achieving mid-single-digit growth in the coming years... savings ... are expected to be delivered over the next three years. - [Scott Smith](CEO)

Contradiction Point 4

Nature of Cost Savings

Savings mix shifts from being ~50/50 to being more heavily weighted towards headcount.

Why is Ethan (J.P. Morgan) substituting for Chris Schott in the earnings call? - Ethan (J.P. Morgan, on for Chris Schott)

2026Q2: The company is disciplined in pursuing in-market, accretive opportunities... The M&A environment is active and favorable. - [Scott Smith](CEO)

How are potential U.S. generic tariffs and the current M&A environment influencing your strategic decisions? - Umer Raffat (Evercore)

20260226-2025 Q4: Scott Smith stated ~50% of savings are from headcount reductions, ~50% from COGS efficiencies... Theodora Mistras added that savings are roughly evenly split between operating and SG&A efficiencies. - [Scott Smith](CEO), [Theodora Mistras](CFO)

Contradiction Point 5

China Business Durability and Growth Trajectory

Contradiction on the durability of China's growth rate and the impact of new procurement policies.

Jason Gerberry (Bank of America) - Jason Gerberry (Bank of America)

2026Q2: The new procurement policy... is expected to cause... growth to moderate from 16-17%, but the company is confident in continued growth through 2027. - [Scott Smith](CEO)

Regarding China policy, should we think of low single-digit growth for the back half as a guide into 2027? For Selatogrel, after enrollment completion, what are the time lags to top-line data? - [Li Wenwen] for Dennis Ding (Jefferies)

2025Q3: The company is pleased with the durability of performance in China... However, policy changes can be a concern. - [Scott Smith](CEO)