Viatris finds room to raise guidance despite India factory shutdown

Viatris (NASDAQ:VTRS) has raised its 2026 financial targets even as a manufacturing shutdown in India is expected to cost about US$100 million in fourth-quarter revenue. The pharmaceuticals group reported third-quarter revenue of US$3.75 billion, essentially unchanged from a year earlier, while adjusted EBITDA rose 4% to US$1.20 billion.

Guidance rises on stronger margins and cash flow

Viatris lifted its 2026 revenue midpoint to US$14.75 billion from US$14.70 billion, adjusted EBITDA to US$4.50 billion from US$4.40 billion, adjusted EPS to US$2.60 from US$2.52, and free cash flow excluding transaction-related and restructuring-related costs to US$2.30 billion from US$2.20 billion. The company also raised the midpoint of estimated GAAP operating cash flow to about US$2.06 billion.

The quarter’s underlying measures were firmer than the headline revenue figure suggests. Adjusted gross margin expanded to 58% from 56%, adjusted net earnings increased 5% to US$821.4 million and adjusted EPS rose 6% to US$0.71. Free cash flow reached US$813.7 million on a GAAP basis, or US$895 million excluding transaction-related and restructuring-related costs.

GAAP loss highlights the cost of adjustments and tax

GAAP results were substantially weaker: Viatris recorded a net loss of US$325.3 million, compared with a US$128.2 million loss in the prior-year quarter. The company attributed the latest loss primarily to a higher income-tax provision, saying minimal tax benefit could be realised on losses in some jurisdictions. The gap between the GAAP loss and adjusted earnings also reflects purchase-accounting amortisation, restructuring costs, acquisition-related expenses and other special items.

Revenue performance was uneven across regions. Greater China net sales climbed 14% to US$702.6 million, while brands increased 1% overall. That strength was offset by declines in Developed Markets, Emerging Markets and Japan, Australia and New Zealand, with Viatris citing European and emerging-market supply constraints and additional competition on certain products.

Pacira deal adds a new growth and execution test

Viatris is also advancing its planned acquisition of Pacira BioSciences for US$36.50 a share in cash, implying an equity value of US$1.65 billion. The transaction is expected to close by the end of November, but its contribution is excluded from the raised 2026 guidance. Viatris said the deal is expected to have minimal impact on its gross leverage ratio at closing; its reported gross debt-to-adjusted EBITDA ratio was 2.9 times at September 30.

Nashik suspension keeps supply risk in focus

The most immediate operational uncertainty sits at Viatris’s oral solid-dose facility in Nashik, India. Following an FDA classification of Official Action Indicated after earlier inspection observations, the company voluntarily suspended manufacturing in October and expects production to resume in the first quarter of 2027. Viatris estimates the disruption reduced third-quarter revenue by about US$100 million and expects a similar impact in the fourth quarter.

New product activity provides some counterweight: Viatris generated about US$115 million of new product revenue in the quarter and now expects roughly US$450 million for the full year. Regulatory approvals for RYZUMVI in US presbyopia and WAKIX in Japan, alongside the US launch of Gwyn Lo, broaden the growth story. The next test is whether those launches can build momentum quickly enough to offset supply constraints while Viatris closes and absorbs Pacira.