VTRS · 10-Q · 2026Q2 · Full report
Gross Margin Drivers
Viatris Inc · 2026-08-06 · Importance 49 · Surprise 32 · No source text
Second-quarter 2026 gross profit increased $123.6 million to $1.46 billion, and reported gross margin expanded to 39% from 37%, primarily because of product mix. Six-month gross profit increased $119.6 million to $2.61 billion, while reported gross margin remained 36% because higher sales were offset by higher cost of sales. Six-month cost of sales increased $317.8 million to $4.66 billion, reflecting higher sales, restructuring costs and $86.8 million of Nashik fire-related inventory and fixed-asset write-offs and manufacturing variances. Adjusted gross margin improved to 57% from 56% for the six-month period, while remaining approximately 57% year over year in the second quarter.
Key facts
- Purchase accounting amortization (primarily included in cost of sales) for the three months ended June 30, 2026 was $586.4 million and for the three months ended June 30, 2025 was $597.8 million; for the six months ended June 30, 2026 was $1,177.9 million and for the six months ended June 30, 2025 was $1,181.3 million. source
- Cost of sales increased from $2,249.2 million for the three months ended June 30, 2025 to $2,300.3 million for the three months ended June 30, 2026. source
- Gross profit for the three months ended June 30, 2026 was $1,456.5 million and gross margins were 39%; for the three months ended June 30, 2025 gross profit was $1,332.9 million and gross margins were 37%. source
- Adjusted gross margins were approximately 57% for the three months ended June 30, 2026 and approximately 57% for the three months ended June 30, 2025. source
- For the six months ended June 30, 2026, adjusted gross margins were approximately 57% compared to approximately 56% for the six months ended June 30, 2025. source
- Cost of sales increased from $4,342.3 million for the six months ended June 30, 2025 to $4,660.1 million for the six months ended June 30, 2026. source
- Gross profit for the six months ended June 30, 2026 was $2,613.7 million and gross margins were 36%; for the six months ended June 30, 2025 gross profit was $2,494.1 million and gross margins were 36%. source
- During the three and six months ended June 30, 2026, the Company recognized total charges of $14.9 million and $86.8 million, respectively, within Cost of Sales primarily related to the write off of inventory and fixed assets damaged in the fire and incremental manufacturing variances. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -8.5% | Cost of sales increased from $4,342.3 million for the six months ended June 30, 2025 to $4,660.1 million for the six months ended June 30,… |
| net_income | negative | realized | -8.5% | Cost of sales increased from $4,342.3 million for the six months ended June 30, 2025 to $4,660.1 million for the six months ended June 30,… |
| margin | positive | realized | +2.0% | Gross profit for the three months ended June 30, 2026 was $1,456.5 million and gross margins were 39%; for the three months ended June 30,… |
| operating_income | negative | realized | -1.4% | Cost of sales increased from $2,249.2 million for the three months ended June 30, 2025 to $2,300.3 million for the three months ended June… |
| net_income | negative | realized | -1.4% | Cost of sales increased from $2,249.2 million for the three months ended June 30, 2025 to $2,300.3 million for the three months ended June… |
| margin | positive | realized | +1.0% | For the six months ended June 30, 2026, adjusted gross margins were approximately 57% compared to approximately 56% for the six months… |
| operating_income | positive | realized | +0.3% | Purchase accounting amortization (primarily included in cost of sales) for the three months ended June 30, 2026 was $586.4 million and for… |
| operating_income | positive | realized | +0.1% | Purchase accounting amortization (primarily included in cost of sales) for the three months ended June 30, 2026 was $586.4 million and for… |