Mylan Reports in line Earnings
Mylan, Inc.’s (MYL) first quarter 2013 earnings (excluding special items) of 62 cents per share were in line with the Zacks Consensus Estimate. Earnings increased 19% from the year-ago quarter. The year-over-year rise in earnings was primarily attributable to higher revenues. Adjusted earnings for first quarter 2013 were at the high end of the guidance range provided by the company. On a reported basis (including special items), first quarter 2013 earnings declined 10% to 27 cents per share.
Revenues climbed 3.2% to $1.63 billion. Revenues were short of the Zacks Consensus Estimate of $1.71 billion.
Mylan reports revenues from 2 segments: Generics and Specialty.
Generic third-party net sales, derived from sales in North America, Europe, the Middle East & Africa (:EMEA) and Asia-Pacific, climbed 0.7% to $1.41 billion.
Segmental third-party net sales were disappointing in North America. Third-party net sales in North American markets declined 4.5% to $732.8 million in the first quarter of 2013. The decline was mainly attributable to the below par showing of new products during the first quarter of 2013.
The products contributed $117 million to the third-party net sales from the region in the first quarter of 2013 as against $2011 million a year ago. We remind investors that Mylan’s segmental revenues in the first quarter of 2012 benefited from the launch of revenues from its generic version of Forest Laboratories, Inc.’s (FRX) Lexapro (depression).
Third-party net sales from the EMEA market improved 10.2% to $369.9 million. Strong performance in France, Italy and the UK boosted EMEA revenues. Third party net sales in the Asia-Pacific market increased 2.2% to $305.1 million on the back of strong sales in the Indian market. Foreign currency movements, however, adversely impacted revenues from the region.
We note that Mylan has received quite a few approvals on the generic front over the past few months. Apart from Mylan, Dr. Reddy's Laboratories Ltd. (RDY) too has been making multiple generic launches over the past few months.
Third-party net sales in the Specialty segment increased 23.7% to $211.6 million. Specialty segment sales were driven by the strong performance of its flagship product – EpiPen auto-injector – for severe allergic reactions. Perforomist Inhalation Solution sales were also strong during the first quarter of 2013.
Adjusted gross margins improved to 49% (from 48%), mainly due to new product launches coupled with increased sales of EpiPen, partially hampered by pricing pressure in the Generic segment.
Adjusted operating expenses climbed 5.6% to $413.5 million during the reported quarter due to an increase in research and development as well as selling, general and administrative expenses.
Outlook
Mylan reaffirmed its 2013 adjusted earnings guidance provided in Feb 2013 while releasing its fourth quarter 2012 results. The company still expects adjusted earnings for 2013 in the range of $2.75–$2.95 per share. Mylan now expects 2013 revenues at the lower half of its previously guided range of $7–$7.4 billion. The Zacks Consensus Estimate for full year 2013 hints at earnings of $2.86 per share on revenues of $7.2 billion.
Mylan expects adjusted earnings in the range of 66 cents-68 cents for the second quarter of 2013. The Zacks Consensus Estimate of 69 cents is above the company’s projected range.
Mylan carries a Zacks Rank #3 (Hold). Celgene Corporation (CELG) appears to be more attractive with a Zacks Rank #2 (Buy).
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