VTRS - Viatris Inc. (VTRS) Goldman Sachs 44th Annual Global Healthcare Conference (Transcript)
2023-06-13 18:36:06 ET
Viatris Inc. (VTRS)
Goldman Sachs 44th Annual Global Healthcare Conference
June 13, 2023, 04:20 PM ET
Company Participants
Scott Smith - CEO
Rajiv Malik - President
Sanjeev Narula - CFO
Conference Call Participants
Nathan Rich - Goldman Sachs
Presentation
Nathan Rich
Great. Well, good afternoon, everyone. Thanks so much for joining us for our first afternoon session. My name is Nathan Rich, I cover the generic pharma space for Goldman Sachs. Very pleased to have Viatris up here with us.
I'll do some quick introductions and then we can jump into the Q&A. So to my right, Scott Smith, new Chief Executive Officer; in the center, Rajiv Malik, President; and Sanjeev Narula, CFO. So thank you guys for joining us. Really appreciate you being here.
Scott Smith
Thank you.
Question-and-Answer Session
Q - Nathan Rich
Great. Well, Scott, new to the company. So you joined the Board in December, became CEO in April. Can you maybe just talk about what attracted you to Viatris and what your initial impressions of the company has been so far?
Scott Smith
So what attracted me - I got a call last summer, from [Rob Cory], who asked me where I was and what I was doing and could I come to meet me in Midtown Manhattan and to have a discussion because they were looking to refresh some positions on the Board and do some things. And I said, absolutely.
And so I went to Midtown and met with him. And that discussion, which I assumed was going to be 15, 20 minutes, half an hour introduction of the company ended up being 4.5 hours. And the amount of energy, enthusiasm and passionate they have for the company was just something incredible that I'd never seen from somebody on the Board before. So I remember leaving that meeting and going home, talking to my wife and saying, I'd love to be involved in this company, one way or the other right, whether on the Board or something else.
And so that was my first impression. And then as I've come in as a Board member and then as the CEO, I have more of that same impression from everybody, right? There's tremendous engagement, tremendous passion, tremendous enthusiasm for the company. Really is a very, very engaged employee base, and there's 37,000 people in the company. So it's not always easy to get that level of engagement. But whether we've traveled to China or Japan or met people on Zoom, it's just at that level of enthusiasm has been there.
The other thing is that first impression is just how solid the company is right now. Most people when they're coming into a CEO job as an outsider, there's been a problem, something happened, there's major issues, need for the change in strategic plan, needs to change people, none of that here. Very, very solid company, in a very good position. Rock solid balance sheet, good cash flows, predictable, robust. And I think there's just an amazing opportunity to take this company from where it is into Phase 2 of the strategic plan and execute and really return this company to significant growth. So to me, that's the excitement and the opportunity for me.
Nathan Rich
Great. I guess maybe for people who aren't as familiar, could you maybe talk about your background and maybe the best way to kind of leverage kind of your past experience here?
Scott Smith
So I have maybe a different background than a lot of people, but one that I think is perfect for where I am at Viatris. And I'm a pharmacologist by training. So I started off in the science part of the business in MBA. I think got involved in big pharma with the Upjohn Company pharmacy and Upjohn Pfizer, different iterations of that company. I went and morphed into BioAtla spec farm company - sorry, Biovail spec farm company where I ran sort of the global commercial operations then to Celgene, where I was the founder of the immunology division and eventually President and COO of the company.
And then to a small biotech company, I met a guy who had an amazing idea, and I wanted to go in and help them build the company and help get it funded. And that's a company called BioAtla, took that company, got it funded, raised about $0.5 billion, got it through IPO and it's out in public and doing well.
So sort of the combination of sort of the big pharma, big biotech experience, where there's a lot of cash and what do you do with the cash and the biotech experience where they're very much cash star of driving. And so the combination of being involved in those two ends, I think, puts me in a unique position to run the company but understand what opportunities are out there from a business development perspective, what the struggles are of the biopharma world.
So I think my experience base is very diverse. I'll also geographically lived all over the world and worked all over the world, have lived and worked in Hong Kong, in China, in Belgium and Switzerland, in the United States, in Canada, in Paris. So I've had an opportunity to do international business across the world. And given that Viatris is a company that operates at 165 countries, that international experience, I think, is important for me as well.
Nathan Rich
And so the company is closing out Phase 1 going into Phase 2 of its long-term strategy. What do you want to see the business deliver over the next six months as you kind of get ready to position the business to hopefully achieve its Phase 2 target?
Scott Smith
I think very, very simple. We want to focus, and we want to execute and we want to deliver the quarters, and then we can go from there. For me, it's just the company set up very well. There is a history. And since Viatris was formed, nine quarters of very solid performance. I want to continue that or accelerate that. We expect to see revenue growth as we move into the second half of the year and for the full year. So just really focusing and executing and making sure we deliver on our commitments for this year and then we can work into Phase 2 of the plan.
Nathan Rich
I guess, lastly and then I want to get into some of the maybe more detailed strategic questions. But at a high level, I guess, what's your vision for kind of the type of company you want investors to view Viatris at? If you're thinking about what - how to pitch this to shareholders.
Scott Smith
Scale, diversity, both geographic diversity and therapeutic diversity, a company which has a strong strategic plan, very strong predictable cash flows and a capital allocation plan that I think will be very, very solid. Once we get and pay down our ratios - debt ratios to three, which we should be very close to, and we're going to look to be able to return to shareholders of the cash flow that we have left, which should be probably $1 million - a minimum of $2.3 billion in '24, pay half of that back to shareholders in terms of share buybacks and dividends and use the other half to enhance the portfolio through business development.
And business development for me is more than just M&A, it's also licensing, partnering, investing in the internal pipeline. But taking our free cash flow and giving some back to shareholders through the mechanisms that I said, and investing in growth on the other side. That's the - that's to me the value proposition of this company and the investment hypothesis.
Nathan Rich
Awesome. Thanks a lot for that overview. I guess, kind of getting into some of the more detailed questions. Divestitures has been on the top of a lot of investors' minds. You guys kind of laid out towards the end of last year, kind of the plan for the divestitures. How talks progress since then. And I think you kind of have talked about announcing at least one in the first half of - or the early part of the second half of this year. Do you kind of feel like you're still on a pace you kind of get those four divestitures completed or announced by the end of the year?
Scott Smith
Things remain on track from what we said on the Q1 call. We hope and are working towards and expect to announce all the divestitures by the end of the year and we would hope to be in a position to announce one in the second half of the year, relatively early in the second half of the year as we move forward. So exactly what we laid out in terms of the Q1 call.
Now having said that, everything is on track. These are matters of strategic choice. We do not need to divest these businesses. These are good businesses. They're doing very well. They're performing very well. We're choosing to divest them to help us accelerate into Phase 2 of the strategic plan. It will allow us to really focus on the core of the business that we want to grow going forward.
So we're not in any kind of - there's no fire sale here. We're going thoughtfully. There's lots of companies who are interested in these assets. We want to make sure we get the appropriate value for them, but we don't need to do these divestitures to make our financial commitments as we move forward here. Again, a matter of strategic choice, but to answer your first question, we remain on track. And I don't know, Raj, if you've got any other context.
Rajiv Malik
No, I think you've very well added. And these are well-performing businesses. We have a lot of interest, and we remain on track, one definitely probably in the Q3, in the second - the rest of them in the year as we proceed, before the end of the year.
Nathan Rich
And so obviously, the goal would be to come together on evaluation, but you're not tied to doing these divestitures if for some reason, you can't find an attractive offer?
Scott Smith
So again, I don't think we're going to sell these at some sort of discount. These are active negotiations. I will say there's lots of interest in these assets. They're very well-performing assets. I think we'll be able to get the value that we expect out of them. You never know until deals close. Nothing is closed at this point in time, but I feel like they're on the right track and within the valuation range that we would expect.
Rajiv Malik
Yes. And otherwise, we'll happily keep and continue to leverage the EBITDA of these businesses, they are great businesses. It was - we just decided like this because we wanted to reshape the company and focus on where we need to take the company and some of these were considered to be nice to have, not must have.
Nathan Rich
Yes. And the European OTC business is the biggest of the planned ones.
Rajiv Malik
Yes.
Nathan Rich
Got it. Okay. And then Sanjeev, can you maybe remind us on the use of proceeds. Obviously, it will depend on the magnitude of the proceeds that you get. But just under the current plan, how you plan to use...
Sanjeev Narula
Sure. So first of all, as Scott pointed out, this is a matter of strategic choice. We're not doing to get the proceeds to pay down our debt and meet our financial commitments. We can do that without the - all the divestitures, whether it's the maturities this year or the maturity next year on our dividend commitment for this year or for the next year. So we could do that without that.
Now clearly, as we do the divest, that gets accelerated. So the plan is as we laid out very clearly, we want to get down to 3x leverage target, which is the standing commitment we've gotten it to maintain our investment-grade rating. So we will get there with or without, but hopefully with the divestitures as quickly as possible. So once we get there, we pivot to a more balanced capital allocation, which is what we said about that is that will be 50% of the cash flow that is remaining, going back to our shareholders in form of dividend and share buyback and the other 50% will go back to business development.
The other thing I'd like to mention that is, once we get down to 3x, meet that threshold for us, we'll operate within a range, which is 2x to 3x because you got a business to run and you can see the opportunities. You can get whether it's the business development or share buybacks, we'll operate within that range just to kind of manage the going-forward business.
Scott Smith
Okay. So net-net, the divestitures were not - don't change our business strategy. They just allow us to accelerate it by some months.
Nathan Rich
Okay, makes sense. And the pro forma numbers that you gave, I think $2.3 billion of free cash flow is a floor. Is there an EBITDA that's tied to that? I think you had talked in the past about like 4.5 to 5. Is that the rough range?
Sanjeev Narula
Yes. So we obviously - we're not giving guidance. What we said is kind of like a target. If you think about it, take on all the divestments that we plan to execute on that, take that out, the remaining company's cash flow will be at minimum $2.3 billion for 2024 with before any divestment cost and the taxes, right? So that obviously gets funded by the divestment here.
So that's kind of what we talked about. Now without giving guidance, I've seen kind of the numbers being floated. If you take that, you can get to a number of 4.6 to 4.9 on EBITDA, but that's kind of the number that's been sell that have floated around. But again, we're not kind of giving guidance on that.
Nathan Rich
Okay. And then from a kind of growth standpoint, I think you've talked about eye care, obviously, GI and derma are the other areas of focus. So you closed the two eye care deals earlier this year. I guess, how should we think about the pace of business development in these areas? I mean do you feel like with Oyster Point and family, you kind of have the foundation that you need and you're kind of trying to grow that? Or are there other acquisitions in the eye care space that you would potentially be looking to do?
Scott Smith
So I definitely think we want to continue to build a franchise in eye care. And the same thing that we want to do in GI and in derm. And I think the eye care strategy is a good proxy for what we want to do in the other therapeutic areas, which there we acquired a customer-facing team with an approved asset and then also acquired other assets that were in development, and we have 3,000 people in development in the company that can help leverage and accelerate some of those development programs. And if there's good assets in the eye care space, we'll continue to build that franchise.
We're going to do the same sort of thing in GI and in derm, maybe a company with a lead asset and add some. Here I would also say it's important that when we're talking about business development, we're not necessarily just talking about M&A though, right? M&A is one way to go. There can be risk, it can be binary. But there's ways to supplement anything you're doing from an M&A perspective, including licensing, partnering, et cetera.
We have a very, very strong, particularly commercial organization around the world, a great distribution network around the world, great development and research resources across the world that are focused on mainly clinical development. And being able to leverage and utilize that backbone that we have around the world is very, very important. We could be taking assets from smaller companies in the U.S. that don't have the structure or the money to be able to commercialize globally. Those would be great assets for us to put in.
We can - in the countries that we're operating in, they may be companies that have assets that they can't think about global commercialization. So I think it's a combination of things that we're going to build these franchises again, potentially through some M&A, potentially through some licensing deals either globally or regionally. There's some partnering things that we can do, again, globally or regionally and then just looking for assets to put into the overall infrastructure that we have in place.
Nathan Rich
And I guess what's your philosophy on the degree of clinical risk you'd be willing to take as you look to do these BD activities?
Scott Smith
So I think we want to stay out of the Phase 1, Phase 2 game. I think we would be willing to take some risk on the Phase 3 asset that was close to the line, that had some interim data or had vinyl data that they were getting ready to submit to the FDA. That sort of risk profile where it's not 100%, but it's pretty close to commercialization, we would definitely consider as well as, of course, commercialized assets.
But I don't think we want to start to get into Phase 1 projects, which will yield assets 9, 10, 11 years from now. And those are very binary risk there. So relatively derisked Phase 3 assets and beyond is what we're really looking at. I don't know if you want to add…
Sanjeev Narula
100%.
Nathan Rich
Maybe last one on the topic, and then we can move on. When you think about GI and derm, you kind of see how eye care plays out, how successful you are before maybe taking bigger steps into those other spaces? Or can you kind of progress these three different areas in parallel?
Scott Smith
I definitely think we can progress in parallel. It's important to note that the eye care acquisitions closed this year, right? So we're sort of still integrating the men. We don't have maximum leverage yet. We'll look to see the trajectory of those eye care assets, particularly Tyrvaya, as we get into the second half of the year and where that goes, and we should be able to leverage the infrastructure we have from a distribution access, commercial perspective, also being able to have the capital to start to move into things like PTC and other things, we should see the effect of that leverage as we go into the second half, '23 into '24, but we're not going to wait to execute the strategy on other fronts. We're very confident that we can be able to do that.
Nathan Rich
Great. And I guess, as we think about the Phase 2 period, let's put the divestitures aside for a second. I guess what are the other, I guess, guideposts or milestones that you're looking for over the next like 12 to 18 months to kind of - as an indication that the business is kind of on track to deliver those longer-term targets. I think 3% revenue growth, I think it's 4% to 5% EBITDA growth and then stronger EPS growth. How should investors kind of track the progress against that maybe outside of the typical quarterly earnings.
Scott Smith
I mean maybe this is too simplistic an answer, but I think just how we're executing on a quarter-to-quarter-to-quarter basis. Taking a look at that, we want to get our leverage ratio down to 3.0 and then when we're in that place, I think we feel confident that we can really start to move into Phase 2 of what our strategic plan.
And we've got a very good talented group of people. We may need to add some skill sets as we really move into Phase 2 if we get into GI, derm and other things. But we've got a very, very good group of people that we can leverage as we move in. We feel very confident based on the stability of the business to be able to move into Phase 2 as quickly as we can.
Nathan Rich
Great. Rajiv, maybe to tie you in here, can you walk us through the kind of step-down in base business erosion that you guys anticipate over the next several years? What's the driver of that? And I guess when we maybe think about the North America and European generics business, have you seen any changes there that would maybe indicate a more stable environment than what we've seen in the past several years?
Rajiv Malik
So I think the business, this business has never been this strong, I would say. Having said that, one, we have much better understand now, a couple of years later, what we have got to work with. One important part of modeling as 4%, 5% erosion at the beginning was the erosion of the brands. And we have seen a much better performance of those branded portfolio over the last nine quarters. That's basically adding another 200 basis points of improvement to the PACE erosion.
So if you put that now, underlying this is the segment's performance. China was when we started. We was in a bucket of risk. China has been hitting on all vendors of our business. Team has performed great well. And last quarter, this is again, for last several quarters, this business has been performing strongly and even showed some growth over there.
Europe has been steady, steady for the last nine quarters, growing 3% to 4%.The - one of the reason is the just mix of this business, 70% brands, 30% generics. Even generics in Europe, erosion, price erosion of the European generics business is not more than1% to 2%. So - and we have enough launches to offset and give us low to mid-single-digit growth.
Emerging markets, once we take out the volatility of the COVID and the ARV business, have been hitting on all ends, a branded business in that segment has been growing at mid-single digit. The only market where we have not been able to little bit reverse the trend of this decline is Japan just because it's heavily impacted by the government regulated mandated price cuts in the beginning of the year.
Now coming back to the USA, I think for our first time in the several last years, dialogue is changing. Changing from price, price, price to supply, supply, supply. And we want to see a little bit more of that as we move into the second half of the year as industry gears up for the serialization track to trace. I think supply is going to be one to focus. So that has rendered in a sort of phase of stability. But for us, we have moved away from that volatile bucket of the commodity generics, which is only now about - our overall generics is about 11%. Our portfolio is heavily tilted towards more complex products.
So I think for us, that volatility is a little bit behind us, as I would say. And we are excited the performance of the products like [Advair, Axon] generic over the last few years. And now looking forward to launch of the Symbicort and so many other complex injectables into this portfolio gives us the confidence that this business is set up for sustainable coming back to the growth even in North America.
Nathan Rich
And the pressure in the complex generics portfolio in the quarter, I think, was more challenging. Could you maybe just explain - I think it had to do with competition coming in on [indiscernible]. Can you maybe just kind of explain how that plays out. Are we at a level where maybe pricing stabilizes. So obviously, you have to kind of get through that. But...
Rajiv Malik
It's going to be - it's always a little bit ongoing. Once you have a generic pricing dynamics, it's always there are going to be some challenges, but it's the profile, the algorithm is completely different. Now for example, Advair was launched in 2019. It's a fourth year, and it's still a very meaningful contributor to the business. So yes, it declines as some competition comes in, but we factor it very much upfront. It's exactly performing how we expected. We modeled competition, for example, and there are upsides also, like we modeled a couple of competitors in this year. If they don't show up, there can be upside to that in the same.
So I think it's how this business is modeled. Q1 was because the status last year, we had an exclusive position over there. And second, [indiscernible], we saw the [indiscernible] and it's coming back during the last year. So there were a couple of reasons why we had the Q1 complex categories showed that glide.
Sanjeev Narula
Overall, the business performance, if you look at the top line is exactly in line with our expectation. With all the pushes and pulls that we talked about, because with the diversified portfolio, you can always have those kind of situation, but it performed well, and we are expecting that to perform in line with our expectation. That's why we reinforced our guidance on a full year basis and come to the midpoint of the - on the top line and then EBITDA as well.
Nathan Rich
We're in an expectation, maybe a slightly different mix than we anticipated but that's when you have a kind of geographic portfolio diversity is normal in the...
Rajiv Malik
This business is not dependent upon one - any one product or any one market or any one launch, I would say. That we have so many different levers and they're all - let's just come to how you manage those levers.
Nathan Rich
Got it. Okay. I had a couple of specific product questions. So first, maybe the monthly GA. I guess, as you're thinking about potentially launching next year, can you maybe discuss your ability to shift the market from the kind of current product to the monthly product that you're going to have?
Rajiv Malik
Look, when we started developing it, the question was, can we develop and we know once and all that. So I think the first of all, Phase 3 data is so positive and so good. And the product - GA is a great molecule. First of all, it's perhaps one of the products which has been tested for a number of years and has stood that time, it's more very safe, very tolerable, much - requires much less monitoring than many other products.
So - and moreover, I think this product - of course, there are compliance benefits from one - 14 injections in a month to one injection, almost 500-milligram to just 40-milligram of the drug. There are multiple. And in fact, the data suggests that just the EDSS score, we have - this product has performed much better than even the conventional GA.
So one, yes, there's a GA, almost there are about 100,000 patients in USA, which are on GA. One, of course, that but then, of course, we are targeting [dimension]. And at the moment, like for any brand launch, we are engaging into all sort of work which we need to do, whether segmenting the SAPs, the patient population, whether it's a medical benefit versus a pharmacy benefit, engaging the payer research and we are building the plan and getting the KOLs and at board show.
I think as we go along, we are very, very confident about this drug. And this, this is going to be a global opportunity. It's going to be a meaningful product for USA and it's also going to be a meaningful product for Europe.
Nathan Rich
And what would be the time line around Europe?
Rajiv Malik
Europe will be about, I would say, the U.S. launch will be next year, second half of - late in the second half and Europe will be about six months later, six to nine months later.
Nathan Rich
Okay. I wanted to maybe move on to Tyrvaya. I guess, pretty modest contribution in the first half, you guys have been talking about being more 4Q weighted. Obviously, you've seen coverage build that you're going to do some marketing. I guess how do you think about the magnitude of inflection in '24 relative to '23? You also have full ownership now, so you may be more control over the go-to-market strategy. Can you just talk about the plans there?
Scott Smith
Yes. I think again, something that I mentioned earlier, it's important to note that that deal just closed this year. And we're just starting to really figure out the leverage points, how we can help the revenues to this point in time are in line with our expectations where we are going forward. So everything is going well.
Yes, I think new specialty launches in the U.S. can be complicated. It can take a few quarters to get the right access pieces in place, get the right support stuff in place. And I think we're in a position where now that we're here, we can help, we can leverage, we've got the capital to be able to really invest in this business. I think you're going to see very significant inflection starting in the second half of this year and, of course, into '24. Do you have any more context?
Rajiv Malik
And one of the reasons for that inflection is the investment which is going into right now second half. We are switching on the DTC in the second half. We are switching on the - spending a lot on the digital marketing because this segment is very DTC segment. So of all, yes, definitely, there's - you're going to see inflection from the '23 to '24 [indiscernible] one. And I think we are confident and excited to see that. And it's early signs, both Scott talked about the excess, the coverage, all that is in place now, export execution on these stuff.
Nathan Rich
Got it. And I think eye care, in general, is supposed to be a $1 billion franchise over this Phase 2 period. How do we get there? I'd assume it's kind of - you need something beyond just Tyrvaya as you think about the building blocks of that $1 billion.
Scott Smith
Absolutely fair question. And we've been talking about $1 billion franchise between now and 2028, I think is what we talked about. And it's - I'm not sure, seven, eight products in development?
Rajiv Malik
Yes. It's a combination of trial and five other programs, which we have already shared with you. It's going to be a combination - almost 60% of this $1 billion is going to come from the dry eye and rest of the 40% is the other molecules. And if you want to take another cut into this, maybe two-thirds will be the USA and one-third will be the rest of the world.
Nathan Rich
Okay.
Scott Smith
We're feeling good about our ability to deliver on that $1 billion between now and '28 given all the programs that we have there.
Nathan Rich
Okay. Great. Maybe Symbicort and then we can maybe zoom out a high level to margins and free cash flow after that. But maybe just wrapping up the product discussion with Symbicort. I guess you're preparing for a launch later this year. I guess, how are you thinking about kind of what that's going to look like? And is it something that could be similar to like an Advair type of launch in terms of what you maybe see over the next one to two years?
Rajiv Malik
Very excited. We're looking forward to launch it in very near future. In fact, not data this year, but - and we are offset to launch that, number one. And second, you're absolutely right. Looking into a algorithm of Advair because it's a very similar setup. If you - Advair had a brand, GSK had a brand and then we had a [indiscernible]. This is a similar setup over here. You have a brand and you have an AG already set up. So yes, modeling something close to Advair is perhaps the right way to do it.
Nathan Rich
Okay. Got it. And I guess maybe margin, Sanjeev, I guess you discussed some, I guess, onetime favorability last quarter that won't repeat. I guess how do we think about margins over the balance of the year? And then if you could tie that into kind of what you see as the algorithm over the Phase 2 period because you have EBITDA growing 100, 200 basis points faster than revenue, where does that leverage come from?
Sanjeev Narula
Sure, sure. So this year, quarter one gross margin was 60% ahead of our expectations. They are couple of things that went on as we talked about at the call. So first of all, the product portfolio in the segment mix was in our favor. China did well. That happens and gross margin comes up better. We had a little bit delayed impact of some of the inflationary impact. We had inventory build at a lower cost that we were able to consume. So that's going to follow up. And we had some other impact and then products like lenalidomide helps with the gross margin.
So what I'm anticipating, quarter two gross margin will go down for the same reasons like the portfolio mix is - and then some of the one-times will not repeat in the second. Then inflation will catch up, which is anticipated, will catch up, going to moderate and then moderate for the second half of the year. But overall, for the full year, we expect gross margin within our target range around 58%.
As we go forward into second - Phase 2 of our strategy, so I expect that gross margin will stabilize. Clearly, some of the base business erosion will be there, pricing impact will be there. But as we go moving up the value chain, things like Tyrvaya, the gross margin is very high, over and above our company averages. As we go higher, so gross margin will stabilize from that perspective. So that's kind of one thing that we should expect.
Second thing what we talked about in terms of SG&A. SG&A will step down in absolute terms because a lot of these - the divestments, but as a percentage of revenue, if you just look at it as the revenue goes up, it probably stay the same. So the percentage will moderate it, but high teens towards the later part of Phase 2.
And then R&D, we're expecting about roughly around 6% on a medium to long-term basis. That obviously will provide us the operating leverage as we go forward, and that will result into the cash flow, which will again be very sustainable, strong and growing cash flow as we go forward.
Nathan Rich
And maybe just to wrap up here in the couple of minutes we have left. You've also talked about EPS growth in the double digits, I think, as high as mid-teens. I guess, one, what do you think it will take to kind of shift the investor lines from EBITDA, which has been the focus historically to maybe more appreciative of the EPS growth story. And then two, how should we think about - because it seems like you'll be kind of close to your target leverage by the end of this year, is more capital devoted to buybacks? And is that what drives the EPS growth?
Sanjeev Narula
Absolutely. Clearly it's not a question - obviously it's a question of when. I think the point is as soon as the divestitures flush through the system and we get to our 3x, our intention is to pivot to an EPS-based company. And there are a couple of things going to happen. One is the organic income growth that's going to drive as we continue to move up the value chain and drive the top line growth. And then we - as we implement our balanced capital allocation and start buying back shares, both will drive the EPS growth that we talked about.
Scott Smith
I think you have to get the growth before you have a real EPS story, right? And the combination of that top line growth with share buybacks, as Sanjeev was saying, can help us really accelerate the...
Nathan Rich
So you can grow the business that drives cash flow that you said about. That's great. Well, we're just about of time. So thanks very much for your time today, and thanks, everyone, for joining.
Scott Smith
Thank you.
Rajiv Malik
Thank you.
Sanjeev Narula
Thank you.
Nathan Rich
Great. Thanks, Scott. Appreciate it.
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Viatris Inc. (VTRS) Goldman Sachs 44th Annual Global Healthcare Conference (Transcript)