Mylan (MYL) Earnings Beat, Revenues Miss Estimates in Q3

Shutterstock photo

Shares of Mylan N.V MYL are up 8.1% in after-market trading, after the company beat on earnings in the third quarter. Mylan's stock has lost 25.8% so far this year compared with the industry's decline of 6.6%.

Adjusted earnings of $1.25 per share beat the Zacks Consensus Estimate of $1.17 and were up from $1.10 in the year-ago quarter.

However, third-quarter revenues of $2.86 billion missed the Zacks Consensus Estimate of $2.87 billion and were down 4% from the prior-year quarter.

Quarter in Detail

The company posts results in three segments on a geographic basis, namely North America, Europe and Rest of World.

North America segment's net sales came in at $1.01 billion, down 14%. This decline was primarily due to lower volumes on existing products like the EpiPen Auto-Injector. This was partially offset by new product sales, including the recent launch of Fulphila, a biosimilar of Neulasta. The decline in volumes was primarily driven by the timing of purchases of products by customers, divestiture of certain contract manufacturing assets, loss of exclusivity of a product, and actions associated with the restructuring and remediation program at the Morgantown manufacturing facility.

The FDA completed an inspection at Mylan's plant in Morgantown, West Virginia earlier this year and made observations through a Form 483. Thereafter, Mylan submitted a comprehensive response to the FDA. During the second quarter of 2018, Mylan started a restructuring and remediation program to reduce complexity at the Morgantown manufacturing facility, which led to the discontinuation and transfer of a number of products to other manufacturing sites, a reduction of the workforce and extensive remediation activities. These actions have led to a temporary disruption in supply of certain products.

Net sales in the Europe segment were $1.04 billion in the quarter, an increase of $0.5 million, which was primarily driven by new product sales and higher  volumes on existing products.

Rest of World segment's net sales of $773.7 million were up 4%, driven by new products.

Adjusted gross margin of 55% was slightly down from 53% in the year-ago quarter.

2018 Outlook Reiterated

Mylan expects 2018 total revenues of $11.25-$12.25 billion. The company anticipates adjusted EPS around $4.55-$4.90.

Our Take

Mylan's third-quarter results were mixed as the company's earnings beat estimates but revenues missed the same.

Mylan proactively discontinued a number of products, while also transferring some to other sites. These have led to a temporary disruption in supply of certain products and reduced volumes in North America generic sales.

Nevertheless, Mylan continues to gain traction with its biosimilar portfolio. The company has launched nearly 475 new products year to date across its segments, including a record number of complex generics and biosimilars. In August 2018, Mylan completed an agreement with certain subsidiaries of Novartis AG NVS to purchase worldwide rights to their global cystic fibrosis products, consisting of the TOBI Podhaler and TOBI solution. This should further broaden the company's portfolio. 

Mylan and partner Biocon obtained the FDA approval for Fulphila. The company earlier received the FDA approval for a biosimilar version of Roche Holdings' RHHBY Herceptin.

Meanhwile, the company expects an approval of the generic version of GlaxoSmithKline's GSK asthma drug, Advair Diskus, Wixela. The FDA had earlier issued a complete response letter (CRL) for the same. Nevertheless, Mylan is in discussions with the FDA, regarding the progress of its review. Based on our latest update from the agency, the FDA is in the final stage of the labeling review.

However, these new approvals might not be enough to combat the persistent decline in North America. 

Zacks Rank

Mylan carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Novartis AG (NVS): Free Stock Analysis Report

Roche Holding AG (RHHBY): Free Stock Analysis Report

GlaxoSmithKline plc (GSK): Free Stock Analysis Report

Mylan N.V. (MYL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: NVS , RHHBY , GSK , MYL

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?