Viatris Q2 2026 earnings: Adjusted profit grows despite Tyrvaya charge

Viatris (Nasdaq: VTRS) reported Q2 2026 total revenues of $3.7568 billion, up 5% year over year, while adjusted diluted EPS increased 11% to $0.69; GAAP diluted loss was $0.10, compared with a loss of less than $0.01 a year earlier. Greater China and new products drove revenue growth, but a $177.8 million non-cash charge related to the planned Tyrvaya rights sale pushed the company to a $118.8 million GAAP net loss.

Core earnings data

Revenue increased 3.5% on an operational, or constant-currency, basis. Viatris attributed the improvement primarily to new products in Developed Markets and strong growth in Greater China, with new products contributing approximately $101 million during the quarter.

Adjusted profitability grew faster than revenue: adjusted EBITDA rose 10% as reported and 8% operationally. The GAAP result moved in the opposite direction because operating expenses included the Tyrvaya charge and other items excluded from Viatris’ adjusted measures.

Business and regional performance

Greater China was the clearest regional growth driver. Net sales reached $713.8 million, up 21% as reported and 16% operationally, reflecting continued strength in branded products.

Developed Markets remained the largest business at $2.1937 billion of net sales. Sales increased 4% as reported and 2% operationally, supported by new product launches and growth in certain generic products.

The other regions were softer. Emerging Markets sales declined 2% to $542.3 million on both a reported and operational basis, with supply constraints in the antiretroviral business weighing on generics. JANZ sales fell 3% as reported to $296.1 million but were flat operationally.

By product category, brands generated $2.4184 billion, up 6% as reported and 4% operationally. Generics increased 3% to $1.3275 billion, as new launches and growth in certain Developed Markets products offset the Emerging Markets supply constraint.

Viatris also advanced several pipeline and portfolio milestones. The FDA approved the Gwyn Lo contraceptive patch in July, with commercial availability expected later in 2026, and approved generic ferric carboxymaltose injection in June. The company also reported positive Phase 3 top-line results for VR-205 in Japanese adults with primary immunoglobulin A nephropathy. The FDA assigned a December 27, 2026, action date to the company’s fast-acting meloxicam application.

Profitability, cash flow, and the balance sheet

GAAP gross margin expanded to 38.8% from 37.2%, while adjusted gross margin rose to 57.5% from 56.6%. Adjusted SG&A decreased slightly to $820.5 million from $826.0 million and fell to 22% of revenue from 23%, helping adjusted operating income increase to $1.1022 billion from $991.2 million. Adjusted R&D rose to $242.0 million from $211.2 million while remaining at 6% of revenue.

Operating cash flow increased 74% to $381.8 million. After $52.8 million of capital expenditures, reported free cash flow was $329.0 million. Excluding $120 million of transaction- and restructuring-related costs, free cash flow was $449 million, compared with $241 million on the same basis a year earlier.

At June 30, cash and cash equivalents stood at $886.5 million, down from $1.3224 billion at the end of 2025. Long-term debt, including the current portion, was approximately $13.35 billion, down from approximately $14.41 billion at year-end. Viatris repaid about $900 million of debt that matured in June and refinanced the remaining balance through €650 million of senior notes due in 2033, ending the quarter with a 2.9x gross leverage ratio.

Through August 5, Viatris had returned approximately $550 million to shareholders, including about $270 million of share repurchases at a weighted average price of $16.42. It had approximately $730 million remaining under its authorized repurchase program. Separately, the company sold its Biocon Limited equity position in July for approximately $380 million in pre-tax consideration, completing the monetization of its Biocon Biologics stake for a total of approximately $780 million.

Tyrvaya charge obscured stronger adjusted earnings

The quarter’s central accounting contrast was the widening GAAP loss alongside double-digit growth in adjusted earnings. Viatris recorded a $177.8 million non-cash charge to write down Tyrvaya’s intangible asset to fair value less selling costs, ahead of the planned sale of its global product rights.

In August, Viatris agreed to sell those rights to Harrow for $30 million upfront and up to $70 million in additional commercial milestone payments. Management said the transaction reflects its effort to direct capital and resources toward opportunities with greater long-term growth potential.

The Tyrvaya charge was excluded from adjusted results, which showed adjusted net earnings of $808.5 million, up 11%. Purchase-accounting amortization of $586.4 million and other restructuring, transaction, litigation, and special items also contributed to the substantial difference between GAAP and adjusted earnings.

2026 guidance

Viatris raised the midpoints of all major 2026 guidance ranges following its first-half results. The revenue range narrowed through a higher low end, while both ends of the adjusted EBITDA and adjusted EPS ranges increased.

The company did not provide GAAP net income or GAAP EPS guidance. Its adjusted guidance also excludes acquired in-process R&D for unsigned transactions because those amounts cannot be reasonably forecast.

Management commentary

CEO Scott A. Smith said commercial execution, pipeline progress, and early benefits from the enterprise-wide strategic review supported the quarter’s performance and the higher full-year outlook. He also said Viatris expects a more balanced operating environment in the second half while continuing to invest in future growth drivers.

Interim CFO Paul Campbell emphasized the combination of shareholder returns and balance-sheet improvement, including the reduction of gross leverage to 2.9x.

Risks investors should monitor

• Nashik supply disruption: An FDA inspection of the oral solid dose facility in Nashik resulted in Form 483 observations, and remediation has caused intermittent disruption. Together with the earlier fire-related suspension, Viatris expects a $100 million to $150 million revenue impact in the second half of 2026.
• Dependence on Greater China for regional growth: Greater China grew 16% operationally, while JANZ was flat and Emerging Markets declined 2%. A slowdown in the strongest region would make consolidated growth more dependent on new launches and Developed Markets.
• Second-half new-product execution: New products generated approximately $172 million in the first half, against a full-year target of $450 million to $550 million. Reaching that range requires roughly $278 million to $378 million of new-product revenue during the second half.
• GAAP earnings volatility: Asset impairments, restructuring expenses, transaction costs, and portfolio sales can create a wide gap between GAAP and adjusted results, as demonstrated by the Tyrvaya charge this quarter.

Summary

Viatris’ Q2 2026 operating performance improved as Greater China and new products lifted revenue, adjusted earnings, margins, and cash flow. The planned Tyrvaya sale produced a sizeable non-cash charge that masked that progress in GAAP results. The raised 2026 outlook indicates greater confidence after the first half, but execution on new-product launches and the size and duration of the Nashik supply disruption will be important determinants of second-half performance.