Why Viatris Shares Are Plunging Monday

Shares of generic pharma company Viatris Inc VTRS were moving sharply lower Monday.

2021 Guidance Trails Estimate: Viatris, which was formed by the merger of the former Mylan and Pfizer Inc.'s PFE Upjohn generic unit, said it expects fiscal year 2021 revenue of $17.2 billion-$17.8 billion.

This is below the consensus revenue estimate of $18.46 billion.

The company expects adjusted EBITDA to come between $6 billion and $6.4 billion and free cash flow of $2 billion to $2.3 billion.

Viatris, which was formed in November, said its priorities in the first three years will be on rebalancing the business; generating strong and growing free cash flows; and rapid deleveraging.

"We are confident that our financial guidance for 2021 is the right starting point for Viatris and continue to expect 2021 to be our trough year in terms of revenue, adjusted EBITDA and free cash flow, reflecting a balanced view of both near-term tailwinds and headwinds, particularly given the delay in closing of the combination between Mylan and Pfizer's Upjohn business," said Michael Goettler, CEO of Viatris.

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Viatris On Dividend, Capital Allocation: Following a comprehensive review of its operating plan for 2021, the Viatris board unanimously supported capital allocation priorities and dividend initiation, the company said.

The board currently expects to pay an annualized dividend of about $450 million or 44 cents per share, with the dividend likely to be increased thereafter.

The company expects to pay an initial quarterly dividend of 11 cents, that is expected to be declared in May, and distributed in June.

Additionally, the company said it expects to repay $6.5 billion in debt by the end of 2023. The company is targeting a long-term leverage ratio of 2.5 times, with a range of 2.2-2.8 times. A share repurchase program isn't likely to be instituted until the leverage ratio is at or below 2.5 times, Viatris said.

VTRS Price Action: Viatris shares were down 11.67% to $16.08 at last check Monday. 

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