) second quarter 2014 earnings (excluding special items) of 69
cents per share fell short of the Zacks Consensus Estimate by a
penny. Earnings in the second quarter of 2014 however increased
1.5% from the year-ago quarter. The year-over-year rise was due to
higher revenues. On a reported basis (including special items),
second quarter 2014 earnings declined 30.4% to 32 cents per
Mylan Inc - Earnings Surprise | FindTheBest
Revenues climbed 8% to $1.84 billion, marginally short of the
Zacks Consensus Estimate of $1.9 billion. Mylan recorded
year-over-year growth on the back of strong sales in the Generics
and Specialty segments.
Second Quarter in Details
Generics third-party net sales, derived from sales in North
America, Europe and rest of the world, climbed 5% to $1.53 billion.
Growth was 6% at constant currency. Segmental third-party net sales
grew 3% to $736.6 million in North America. Though newly launched
products performed well, sales in the region were adversely
affected by sales of existing products due to unfavorable pricing
Third-party net sales from the European market improved 10% to
$395.9 million aided by favorable foreign currency movements. Third
party net sales from rest of the world rose 6% to $396 million.
Segmental performance improved on the back of increased sales of
its antiretroviral products in India. Japanese performance was also
strong during the quarter. Excluding the impact of foreign currency
movements, segmental sales climbed 11% in the second quarter of
Third-party net sales in the Specialty segment jumped 22% to $287.8
million. Specialty segment sales were boosted by the strong
performance of its flagship product - EpiPen Auto-Injector - for
severe allergic reactions. Sales of the product improved due to
market expansion and favorable pricing.
Adjusted gross margin during the second quarter of 2014 expanded to
50% from 49% in the year-ago quarter on the back of strong sales of
2014 Outlook Adjusted
Mylan tweaked its outlook for 2014 both with respect to earnings
and revenues. The company now expects adjusted earnings per share
in the range of $3.25 to $3.45 (old guidance: $3.25 to $3.60 ). The
company expects revenues in the range of $7.8 billion to $8 billion
(old guidance: $7.8 billion to $8.2 billion). The projection
includes the launches of the generic versions of Copaxone and
Celebrex in the final quarter of the year. The Zacks Consensus
Estimate for 2014 is pegged at earnings of $3.37 per share on
revenues of approximately $7.79 billion.
The company expects adjusted earnings per share in the band of 90
cents to 95 cents in the third quarter of 2014. The guidance is
below the Zacks Consensus Estimate of $1.04. Mylan expects the
fourth quarter of 2014 to be its strongest this year due to the
above generic launches.
While impressed by the rebound in the Specialty segment after a
disappointing first quarter, we are disappointed by soft generics
sales in the U.S. which were down 5.8% sequentially. Mylan's deal
with Abbott Laboratories (
) to buy the latter's branded specialty and generics business in
the developed ex-U.S. markets is a prudent move. The all stock deal
is expected to close in the first quarter of 2015. Mylan said
that its 2018 earnings guidance (of at least $6.00 per share) could
be reached earlier in the event of the deal achieving its desired
Nevertheless, the slashing of the top end of the 2014 guidance both
for revenues and earnings is disappointing. The lower-than-expected
third quarter earnings guidance is also concerning. Consequently,
the earnings report failed to find favor with investors and the
stock was down in early trading.
Mylan carries a Zacks Rank #3 (Hold). Better-ranked stocks in the
health care space include Mallinckrodt (
) and Celgene Corp. (
). While Mallinckrodt carries a Zacks Rank #1 (Strong Buy), Celgene
is a Zacks Ranked #2 stock.
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