Shares of Viatris (VTRS -1.28%), the biopharmaceutical company behind the Epi-Pen and Lipitor, are falling in response to the company's fourth-quarter earnings call. The drugmaker's outlook for 2022 isn't as enthusiastic as analysts were expecting. Disappointed investors knocked the stock 22.9% lower as of 11:52 a.m. ET on Monday.
The average investment bank analyst following Viatris expected a $0.23 per share profit in the fourth quarter. Instead, the company reported a net loss of $0.22 per share. In 2022, the company expects total revenue to land in a range between $17 billion and $17.5 billion. The average analyst who follows Viatris expected the company to forecast $17.6 billion.
The stock's fall today would have been much worse if not for a couple of shareholder-friendly moves. Today, Viatris also announced the sale of its biosimilars portfolio to Biocon Biologics for $2 billion in cash up front. The deal also includes around $1 billion of preferred shares representing at least 12.9% of Biocon Biologics.
Viatris also announced a plan to return $1 billion to shareholders in the form of stock buybacks.
Mylan and Pfizer's portfolio of drugs that have already lost market exclusivity merged to form Viatris in late 2020. The company's reporting significant operating losses now, but it isn't finished selling its least-profitable assets. In fact, management identified opportunities to divest enough assets to generate up to approximately $9 billion in pre-tax proceeds.
In theory, selling off noncore assets will improve Viatris' margins, which have been more than a little upsetting. In 2021, sales, general, and administrative expenses alone chewed through 80% of the company's gross profit.