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Mylan's (MYL) Q3 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research

Mylan N.V. MYL reported adjusted earnings of $1.17 cents per share in the third quarter of 2019, which beat the Zacks Consensus Estimate of $1.14 but declined from $1.25 reported in the year-ago quarter.

However, third-quarter revenues of $2.96 billion missed the Zacks Consensus Estimate of $3.03 billion. Revenues increased 3% reportedly and 6% at constant exchange rate (“CER”) from the prior-year quarter.

Shares of the company increased 1.7% in pre-market trading following the earnings release. However, Mylan’s stock has declined 28% year to date compared with the industry’s decrease of 1%.

Quarter in Detail

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

North America segment’s net sales came in at $1.09 billion, up 8% year over year. The growth was driven by higher sales of new products, especially Wixela Inhub and Yupleri. This was partially offset by lower sales of existing products due to lower volumes as well as lower pricing and changes in the competitive environment, including loss of exclusivity on tadalafil.

Net sales in the Europe segment were $1.05 billion, up less than 1% on the back of higher sales of new products including Hulio, and higher volumes of existing products. However, it was partially offset by unfavorable impact of foreign currency translation and lower pricing on existing products. Net sales in the segment were up 6% at CER.

Rest of World segment net sales of $793.7 million were up 3%, driven by new product sales and higher volumes of existing products. This was partially offset by lower pricing on existing products and unfavorable impact of foreign currency translation. Net sales were up 4% at CER.

Adjusted gross margin of 53% declined from 55% in the year-ago quarter.

2019 Guidance

The company updated its guidance for 2019. Revenues are projected between $11.5 billion and $12 billion compared with the previously expected range of $11.5 billion - $12.5 billion. The Zacks Consensus Estimate is pegged at $11.66 billion.

The company anticipates adjusted EPS around $4.20-$4.40 (previously $3.80-$4.80). The Zacks Consensus Estimate is pegged at $4.26.

Our Take

Mylan’s third-quarter earnings beat estimates but sales missed the same. While the generics market experienced a slowdown due to pricing pressure in major markets, the company’s new products did well in the quarter. Moreover, it is on track to launch a biosimilar version of Roche’s RHHBY blockbuster cancer drug, Herceptin. Meanwhile, the company’s decision to merge with Upjohn, Pfizer's PFE off-patent branded and generic established medicines business is also encouraging.

However, rising competition and continued supply constraints for EpiPen remains a concern. We note that rival Teva Pharmaceutical TEVA has already won FDA approval for the first generic version of Mylan’s EpiPen and EpiPen Jr, which, in turn, will unfavorably impact sales further.

Mylan N.V. Price, Consensus and EPS Surprise

 

Mylan N.V. Price, Consensus and EPS Surprise

Mylan N.V. price-consensus-eps-surprise-chart | Mylan N.V. Quote

Zacks Rank

Mylan currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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