Viatris Inc - Quarter Report: 2020 March (Form 10-Q)

Delaware		83-4364296
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

Yes     ☐      No     ☒

Yes     ☒      No     ☐

Yes     ☒     No     ☐

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EXPLANATORY NOTE			3
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Condensed Consolidated Statements of Income for the three months ended March 29, 2020 and for the period from February 14, 2019 (date of incorporation) to March 31, 2019			4
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 29, 2020 and for the period from February 14, 2019 (date of incorporation) to March 31, 2019			5
Condensed Consolidated Balance Sheets as of March 29, 2020 and December 31, 2019			6
Condensed Consolidated Statements of Equity for the three months ended March 29, 2020 and for the period from February 14, 2019 (date of incorporation) to March 31, 2019			7
Condensed Consolidated Statements of Cash Flows for the three months ended March 29, 2020 and for the period from February 14, 2019 (date of incorporation) to March 31, 2019			8
Notes to Condensed Consolidated Financial Statements			9
Report of Independent Registered Public Accounting Firm			10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations			11
Item 3.
Quantitative and Qualitative Disclosures About Market Risk			12
Item 4.
Controls and Procedures			12
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings			12
Item 1A.
Risk Factors			12
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds			12
Item 3.
Defaults Upon Senior Securities			12
Item 4.
Mine Safety Disclosures			13
Item 5.
Other Information			13
Item 6.
Exhibits			13
Signature			14

(actual dollars and shares)			Three Months Ended  March 29, 2020				Period From    February 14, 2019 (Date  of Incorporation) to  March 31, 2019
Revenues		$	—			$	—
Operating expenses			—				—
Other (income)/deductions—net			—				—
Income before provision/(benefit) for taxes on income			—				—
Provision/(benefit) for taxes on income			—				—
Net income		$	—			$	—
Earnings per common share—basic		$	—			$	—
Weighted-average common shares—basic			100				100

(actual dollars)			Three Months Ended March 29, 2020				Period From  February 14, 2019 (Date  of Incorporation) to  March 31, 2019
Net income		$	—			$	—
Other comprehensive income/(loss) before tax			—				—
Tax provision/(benefit) on other comprehensive income/(loss)			—				—
Other comprehensive income/(loss)			—				—
Comprehensive income attributable to Upjohn Inc.		$	—			$	—

(actual dollars and shares)			As of           March 29, 2020				As of    December 31, 2019
		(Unaudited)
Assets
Total current assets		$	—			$	—
Total assets		$	—			$	—
Liabilities and Equity
Total current liabilities		$	—			$	—
Total liabilities			—				—
Commitments and Contingencies
Common stock, $0.01 par value; 1,000 shares authorized; issued: 2020—100 shares; 2019—100 shares			1				1
Additional paid-in capital			—				—
Due from shareholder			(1	)			(1)
Retained earnings			—				—
Accumulated other comprehensive income/(loss)			—				—
Total Upjohn Inc. shareholder’s equity			—				—
Total liabilities and equity		$	—			$	—

		Common Stock
(actual dollars and shares)			Shares				Par Value				Add’l Paid-In Capital				Due from Share-holder				Retained Earnings				Accum. Other Comp. Income/(Loss)				Upjohn Inc.  Share -  holder’s  Equity
Balance, January 1, 2020			100			$	1			$	—			$	(1	)		$	—			$	—			$	—
Net income																			—								—
Other comprehensive income/(loss), net of tax																							—				—
Balance, March 29, 2020			100			$	1			$	—			$	(1	)		$	—			$	—			$	—

		Common Stock
(actual dollars and shares)			Shares				Par Value				Add’l Paid-In Capital				Due from Share-holder				Retained Earnings				Accum. Other Comp. Income/(Loss)				Upjohn Inc.  Share -  holder’s  Equity
Initial capitalization, February 14, 2019 (date of incorporation)			100			$	1			$	—			$	(1	)		$	—			$	—			$	—
Net income																			—								—
Other comprehensive income/(loss), net of tax																							—				—
Balance, March 31, 2019			100			$	1			$	—			$	(1	)		$	—			$	—			$	—

(actual dollars)			Three Months Ended March 29, 2020				Period From     February 14, 2019 (Date   of Incorporation) to   March 31, 2019
Operating Activities
Net income		$	—			$	—
Adjustments to reconcile net income to net cash provided by operating activities:
Other changes in assets and liabilities:			—				—
Net cash provided by operating activities			—				—
Investing Activities
Net cash provided by investing activities			—				—
Financing Activities
Net cash provided by financing activities			—				—
Effect of exchange-rate changes on cash and cash equivalents			—				—
Net increase/(decrease) in cash and cash equivalents			—				—
Cash and cash equivalents, beginning			—				—
Cash and cash equivalents, end		$	—			$	—
Supplemental Cash Flow Information
Cash paid during the period for:
Income taxes		$	—			$	—
Interest			—				—

On July 29, 2019, Pfizer, Upjohn, Mylan and certain of their affiliates entered into a series of agreements to combine the Upjohn Business with Mylan in an Reverse Morris Trust transaction, creating a new global pharmaceutical company. Under the terms of the Transaction, Pfizer will contribute the Upjohn Business to the Company and distribute its ownership interest in Upjohn to Pfizer stockholders via either a or a (the “Distribution”) and, immediately thereafter, Upjohn will be combined with Mylan. Pfizer stockholders would own 57% of the combined company and former Mylan shareholders would own 43% of the combined company on a fully diluted basis. For more information regarding the Transaction, see the Registration Statement.

This report and other written or oral statements that the Company makes from time to time contain forward-looking statements. Such forward-looking statements involve substantial risks and uncertainties. The Company has tried, wherever possible, to identify such statements by using words such as “will,” “may,” “could,” “should,” “would,” “likely,” “ongoing,” “anticipate,” “estimate,” “expect,” “project,” “potential,” “intend,” “continue,” “plan,” “believe,” “assume,” “target,” “forecast,” “guidance,” “goal,” “objective,” “aim,” “seek” and other words and terms of similar meaning or by using future dates in connection with any discussion of, among other things, the Company’s anticipated operating and financial performance, business plans and prospects, expectations for its products, sales efforts, expenses, interest rates, foreign exchange rates, the outcome of contingencies, such as legal proceedings, government regulation, the ability to successfully capitalize on growth opportunities or prospects, manufacturing and product supply and the Company’s expectations regarding the impact of a novel disease caused by a strain of coronavirus (“COVID-19”) on its business and operations. In particular, these include statements relating to future actions, including, among others, the expected timing, benefits, charges and/or costs in connection with the pending combination of the Upjohn Business with Mylan to create a new global pharmaceutical company, Viatris, and the Company’s anticipated liquidity position, the anticipated costs and savings from certain initiatives, and the expected payments to the unfunded pension and postretirement plans and expected funding obligations.

Transaction. A description of the risks and uncertainties for the Upjohn Business, Mylan and the combined company may be found in the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” sections of the Registration Statement, which was declared effective on February 13, 2020 and is on file with the SEC. Additional discussion regarding certain risks and uncertainties described above is included under the heading entitled “Risk Factors” in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form The Company notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

During the period covered by this report, the Company did not conduct any material activities other than those related to its formation and the matters contemplated by the Transaction. Therefore, the Company did not incur any significant risk. You should also read and consider the risk factors associated with the Upjohn Business because these risk factors may affect the operations and financial results of the new combined company and the Company’s common stock following the closing of the Transaction. The Company refers to the “Forward-Looking Information and Factors That May Affect Future Results” section of the MD&A of this Quarterly Report on Form and to the description of the risks and uncertainties for the Upjohn Business, Mylan and the combined company that may be found in the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” sections of the Registration Statement, which was declared effective on February 13, 2020 and is on file with the SEC.

In December 2019, illnesses associated with COVID-19 were reported and the virus has since caused widespread and significant disruptions to daily life and economies across geographies, with cases of the virus reported in over 180 countries. The World Health Organization has classified the outbreak as a pandemic. The COVID-19 pandemic presents a number of challenges for the Company and the Upjohn Business, including, among others, potential delays or disruptions related to regulatory approvals in connection with the anticipated combination of the Upjohn Business with Mylan. For the Upjohn Business that is to be contributed to the Company under the terms of the Transaction, its business, operations, financial condition and results have been impacted by the COVID-19 pandemic to varying degrees, which are currently expected to primarily impact the second quarter of 2020. The pandemic presents a number of challenges for the Upjohn Business, including, among others, impacts due to travel limitations, social distancing and government-mandated work-from-home or shelter-in-place orders; potential manufacturing disruptions and delays and supply chain interruptions, including challenges related to reliance on third-party suppliers; impacts on product demand, including due to reduced numbers of in-person meetings with prescribers, patient visits with physicians, as well as increased unemployment resulting in lower new prescriptions or refills of existing prescriptions; costs associated with the COVID-19 pandemic, including protocols intended to reduce the risk of transmission; potential interruptions or delays in the operations of certain regulatory authorities; and government or regulatory actions to contain the virus or control the supply of medicines. Further, the COVID-19 pandemic, and the volatile global economic conditions stemming from the pandemic, could precipitate or amplify the other risk factors that are identified in the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” sections of the Company’s Registration Statement.