S&P changes Viatris outlook to negative

S&P said it changed its outlook for Viatris Inc. to negative from stable and affirmed its BBB- rating.

“Viatris' S&P Global Ratings'-adjusted leverage has been high for the rating since the company's formation in 2020. Our tolerance for leverage remaining above 3.5x at the BBB- rating is limited, given the extended period of high leverage and absent a history of maintaining leverage below 3.5x.

“Moreover, the company has spent most of the (after tax) cash proceeds from its divestiture of its biosimilars business on M&A (about $750 million) and share repurchases (about $250 million) in the first quarter, and only a minority of the proceeds on debt reduction, while leverage was high for the rating,” S&P said in a press release.

However, S&P noted “Supporting the BBB- rating is the company's business strength, which is characterized by good scale and market share, robust diversification across its businesses, products, geographies, payors, and manufacturing sites, and strong profit margins.”

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