Doretta Mistras
Chief Financial Officer at Viatris
Thank you, Philippe. And good morning, everyone. Building on Scott's earlier comments, this has been an exceptionally strong quarter and our first full quarter on an ex-divestiture basis, the results of which are highly encouraging and indicative of the strong momentum we anticipate carrying into the new year.
We're pleased to report our diversified base business grew 3% year-over-year, marking our sixth consecutive quarter of operational revenue growth. This performance also carried through to adjusted EBITDA and adjusted earnings per share, which grew approximately 4% and 6%, respectively. We generated significant free cash flow of $866 million, excluding the impact of transaction costs and taxes, which enabled us to continue strengthening the balance sheet by paying down debt. Going forward, we have a strong foundation to execute on our three strategic pillars.
As I review the highlights for the quarter, to note, my commentary on segment performance will be on a divestiture-adjusted operational basis. Growth of our base business revenue was up 3% year-over-year. And once again, all of our segments grew versus the prior year. We had strong performance from brands, up 2% and from generics, up 4%. Brand performance included expansion of our cardiovascular portfolio in certain Latin American countries and strong growth in Europe and Greater China. Generics growth was attributable to strength in our broader European portfolio, complex products in North America and strong volume performance across the JANZ region.
New product revenue was $133 million for the quarter, bringing the total to $497 million year-to-date. We remain confident we will be at the higher end of our range of $500 million to $600 million for the year. In developed markets, net sales grew by approximately 3%, driven by robust strength in our generics business.
In Europe, we saw another quarter of durable growth across our diversified business, up 6%, driven by contributions from new products and strong generics performance in key countries, including France. In North America, we saw another quarter of growth in generics, up 5%, benefiting from complex products such as Breyna and Wixela, as well as from Lisdexamphetamine.
Within our brands business, net sales declined from the continued impact of Medicaid utilization in certain non-promoted brands and lower EpiPen volumes resulting from the formulary changes which occurred earlier in the year. In Greater China, net sales grew approximately 3% over the prior year. This was as a result of continued strong volume growth across multiple channels, including e-commerce, retail and hospitals. In emerging markets, net sales grew 2%, driven by the expansion of our branded cardiovascular portfolio in certain Latin American countries and strength in our MENA and emerging Asia regions. These benefits help to absorb supply chain impacts affecting our ARV generics business. And lastly, JANZ grew approximately 8%, benefiting from new products in Australia and volume growth from our promoted brands in Japan.
Turning to the P&L and cash flow. Adjusted gross margin was stable at approximately 58.5% and operating expenses were roughly flat over the prior year, both in line with our expectations. Free cash flow for the quarter, excluding transaction costs and taxes grew 10%, driven by higher adjusted EBITDA and lower working capital. This significant free cash flow and cash from divestitures enabled us to continue executing on our debt repayment plan. We repaid $1.9 billion of debt, including the $325 million that was repaid in October, bringing our notional debt outstanding below $15 billion and line of sight to below $14 billion by year end.
Following the upcoming repayment of approximately EUR1 billion at maturity in November, we expect to exit the year at approximately 3 times gross leverage, and we will have successfully completed our deleveraging efforts and achieved meeting our long-term gross leverage target at year end.
Going forward, we plan to operate within our long range target of 2.8 times to 3.2 times. This positions the Company with a meaningfully stronger balance sheet and a continuing investment grade rating, all of which will serve as the foundation of our capital allocation decisions going into next year and beyond.
Turning to the remainder of the year. We are reaffirming our outlook with full year 2024 base business operational revenue growth of approximately 2% and flat adjusted EBITDA and adjusted earnings per share versus last year. We have revised these earnings ranges solely to reflect the impact of IPR&D related to the sotagliflozin licensing agreement incurred in October.
A few comments on sequential phasing for the fourth quarter. Total revenue is expected to be lower for the following reasons: normal product seasonality in developed markets and Greater China region, phasing of certain generic products in North America and generic entrants in our cardiovascular products in JANZ.
Adjusted EBITDA and adjusted earnings per share will be impacted by a step down in adjusted gross margin due to normal product and segment mix and an increase in adjusted SG&A due to timing and normal cadence of investment.
And lastly, free cash flow in the fourth quarter is also expected to be lower due to the impact from divestiture costs and taxes, higher capex and semi-annual interest payments. I would note that these trends are all consistent with our expectations and prior periods.
In summary, we believe these results demonstrate our encouraging fundamentals from our diversified and growing base business, which continues to produce significant free cash flow. The prudent work we have done on strengthening the balance sheet provides us with a strong foundation as we pivot to a more balanced capital allocation strategy of funding our vision and returning capital to shareholders.
But before I conclude, given the level of investor interest in modeling our selatogrel and cenerimod assets, we are providing a workbook as part of our Q3 earnings package that can be found on our investor website.
And with that, I'll hand it back to the operator to begin the Q&A.
